Sensex on Friday rallied to end above 31,000 for the first time, as higher derivatives rollover led to strong follow-up buying in index heavyweights and foreign investors continued their buying spree in a bullish market. With the Sensex adding 1300 points in just one month, analysts have cautioned retail investors about the steep rise in valuations and the possibility of a correction. The BSE Sensex crossed the landmark 31,000-level to hit a lifetime high of 31,074.07. After paring some gains, the 30-share index settled at 31,028.21, up 278.18 points, or 0.90 per cent. It surpassed the earlier record closing of 30,750.03 hit on Thursday. The broader Nifty Index also breached the 9,600-level for the first time, before settling at a record high of 9,595.10.
The BSE Sensex has risen 25.53 per cent, while the NSE Nifty has gained 30.38 per cent since the BJP-led NDA government came to power in May 2014. Sustained buying by domestic and foreign investors propped up the market at elevated levels amid optimism for more reforms by the government. “Sensex attaining 31,000 level is one more milestone in this upmove with the latest rise of 1000 points taking just one month and at the same time Sensex grew 20 per cent from its recent bottom in just 5 months. We seem to be headed higher with or without some intermittent corrections thrown in,” said Deepak Jasani, head — retail research, HDFC Securities.
“Investors should not rush to buy stocks. They need to be careful. Retail investors are normally late in entering the market but last in leaving. Sensex can’t go up and up on a daily basis,” BSE dealer Pawan Dharnidharka said. Sensex was at 29,655 on April 24 this year.
Anand James, Chief Market Strategist, Geojit Financial Services, said, “impressive rollover numbers and strong rupee boosted sentiments allowing the index heavy weights to help markets to rise to record peaks. Banks were also seen jumpy ahead of the RBI’s meet on stressed asset recovery. Pharma though, continue to struggle, which were trounced by dismal earning numbers and intense pricing pressure in the US market.” Creation of new positions by participants following the beginning of the June futures and options (F&O) series added to the momentum.
Jayant Manglik, President, Retail Distribution, Religare Securities, said, “the week ended on a strong note and we feel it’ll continue next week as well. Any dip in between should be considered as buying opportunity in index majors. However, midcap and smallcap counters should be dealt with caution as they may consolidate further prior to any significant rebound.”
The Sensex rose by 563.29 points, or 1.84 per cent, during the week — the third week in running — while the Nifty finished the week 167.20 points, or 1.77 per cent higher. “Market touched another milestone supported by continued buying interest on index heavy weights post expiry. Expectation on good monsoon & a slow pace in interest rate hike by FED continue to weigh the sentiment. Mid and small caps outperformed as recent correction scaled down the valuation gap with large caps, this gave an entry point for those who missed the opportunity,” said the head of research of a leading broking firm.
The rupee strengthened further by 18 paise to end at 64.44/45 on sustained selling of the US dollar by exporters and banks.