Indian market reached a record high today as Sensex crosses 50,000 points. Sensex has gained over 90% from its March low of 25,981 points.
Neelesh Surana, CIO, Mirae Asset said that earnings growth has supported this rally. “Benchmark Sensex reaching all time high and crossing 50,000 points should not be surprising as growth has picked up. Markets have been constructive throughout the year despite the pandemic. In fact, earnings growth in a few sectors like IT and consumer durables remained positive throughout the year despite the pandemic.”
He strongly believes that the earnings cycle will continue to go up over the next three years while the interest rate will remain low.
S Krishnakumar, CIO-Equity, Sundaram MF feels that the current market rally reflects India economic expansion. “A crisis has triggered a coordinated action amongst global central banks and governments. India has also seized the opportunity in this time of crisis to unleash the next set of reforms and favourable policies to help the industries, investment climate and job creation. While corrections and volatility is the short term is a part of market behaviour, I feel that it is the start of the next phase of economic expansion in India. Investors with a long term perspective should continue to invest systematically into equities,” said Krishnakumar.
Commenting on disconnect between the market and economy, he said that stock markets reflect the future of the economy and the corporates. So they are a lead indicator most of the time. “Having said that, during the last 9 months of the recovery post covid fall, the listed corporates – typically more organised space and listed space seem to be doing better than the unorganised sector, MSME etc., which are typically unlisted, and gaining market share. The pain in the smaller segments is receding, albeit slowly. So there does appear to be disconnect between the listed peers and the rest, in a broader sense,” added Krishna.
Meanwhile, US and other Asian indices have been in the positive range today on optimism of good support from the US economy after the administration of new US President Joe Bidden in the White House.
Alok Agrawal, senior fund manager, PGIM India MF said earnings numbers will be a key indicator going ahead for market growth. “India is a long term growth story, and our fundamentals remain intact. Good and efficient companies with strong balance sheets, steady earnings growth and investor friendly practices would likely continue to be favourites amongst investors. All eyes would now be on earnings growth, especially when valuations have not left too much room for error,” said Alok.
Nilesh Shah, MD and CEO, Kotak Mutual Fund said, “Sensex touching 50000 in 2021 is like Indian cricket team winning test series in Australia against all odds of Covid 19. While economic data is about the past which is improving month on month, Sensex is reflecting the positivity about the future."
Waqar Naqvi, CEO - Taurus Mutual Fund said, "The rally in the banking, PSU, metals, auto and IT sectors has helped the Sensex cross the landmark number of 50,000 setting a record high. If the midcaps join the party, which is a high probability, on the back of the vaccinations and the anticipated announcements in the central budget to boost demand, the stock markets should continue to do well in the foreseeable future. From this level minor ups and downs in the index are not going to bother investors."
