The BSE Sensex rose 609.83 points, or 1.18 per cent , to close at 52,154.13 after touching a record high of 52,235.97. The NSE Nifty gained 151.40 points, or 1 per cent , to end at 15,314.70. The index had hit an all-time high of 15,340.15 earlier during the day.
Fund managers said the record-breaking run had raised concerns over an overheated market but surprise profit growth by companies in the December quarter has partially doused such worries.
“The strong growth in earnings has made the market valuations cheaper,” said Nilesh Shah, MD, Kotak Mutual Fund.
An ETIG study showed most companies beat market expectations in the October-December period with 3,087 firms posting 69 per cent growth in net profit during the period from a year ago—the strongest in nine quarters.
The better-than-expected profit growth has eased fears that the run-up in the stock market is entirely fuelled by strong flows from foreign investors armed with cheap money thanks to near-zero interest rates in developed markets.
“It’s a matter of relief for investors when companies perform. Sentiment is anyway positive going by the way foreign investors and retail investors are putting money into the market,” said Shah.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 1,234 crore on Monday, taking their purchases in February to almost Rs 20,700 crore. In 2021, they have pumped about Rs 27,750 into India stocks, helping the Sensex and Nifty gain close to 10 per cent each.
On Monday, NSE’s Nifty Bank index rose 3.3 per cent to its all-time high. Axis Bank jumped 5.9 per cent , ICICI Bank gained 4.1 per cent and State Bank of India (SBI) advanced 3.5 per cent . So far in 2021, the banking index has risen about 16 per cent .
Economists said softer consumer inflation allows the RBI to fund the high fiscal deficit led by the government’s borrowing programme.
“We expect the RBI to focus on funding the high fiscal deficit at reasonable yields to nurse recovery,” said Bank of America in a note to clients.
Fund managers said investors are keeping a watch on oil prices that could put pressure on inflation. Crude prices advanced on Monday to their highest in almost 13 months on concerns over intensifying tensions in the Middle East.
Brent crude was up 1.4 per cent , at $63.27 a barrel, after surging to $63.76 earlier in the day, the highest since January 22, 2020. Oil prices rose 5 per cent last week.
Elsewhere in the world, Asian and European markets rose on Monday with Japan’s Nikkei 225 surging past the 30,000 level for the first time in over 30 years. The Euro Stoxx 600 index was up 1 per cent in afternoon trade. South Korea’s Kospi jumped 1.5 per cent . Markets in China, Taiwan, Hong Kong, and the US were closed on Monday for holidays.
