Stock market benchmark BSE Sensex on Wednesday soared 310 points and breached the 35,000 mark for the first time after the government decided to cut its additional market borrowing requirement by 60 per cent for the current fiscal year. The index took just 17 sessions to scale the 35,000-mark from the 34,000-level reached on December 26.
Calming fears over widening fiscal deficit, banking stocks rallied after the government lowered the additional borrowing requirement for the current fiscal to Rs 20,000 crore from Rs 50,000 crore estimated earlier. The Sensex surged 310.77 points, or 0.89 per cent, to end at 35,081.82, breaking its previous record of 34,843.51 reached on January 15.
The broader Nifty index of the NSE jumped 88.10 points, or 0.82 per cent, to close at 10,788.55, surpassing its previous record of 10,741.55 hit on January 15. The cut in borrowings also brought down the bond yields.
Nitasha Shankar, head of Research at YES Securities, said, “We believe that this is a stock pickers market. While broad index based returns may remain capped with the markets touching new highs, fundamentally strong stocks would outperform.”
Mirroring the market’s bullish mood, all the sectoral indices led by capital goods and bank, ended in the green with gains in the range of 0.11-1.59 per cent. Among Sensex components, Axis Bank topped the gainers’ list by surging 4.65 per cent, followed by SBI 3.44 per cent. Other gainers included ICICI Bank, Yes Bank, HDFC and Reliance Industries.
Shares of IT companies such as Infosys and Tata Consultancy Services continued to attract buyers and rose up to 2.61 per cent.
The mid-cap index rose 0.66 per cent while the small-cap spurted 0.43 per cent. “It’s a celebration time for all the market participants as the Sensex crossed the 35,000 for the first time and touched an all-time high. The markets began the day on a weak note. However sentiment turned positive when the announcement from the government sources came saying that government can cut on borrowings with tax collections exceeding budgeted estimates and disinvestment targets. This led to softness in yields and buying interest in banking sector resumed,” said Anita Gandhi, whole time director, Arihant Capital Markets.
Rakesh Tarway, head of Research, Reliance Securities, said, “the IT sector continues to trade at 52-week high with upgrades post Q3FY18 results and positive comments from the management with improvement in IT spending and budgets owing to new initiatives like AI and Automation. We believe markets will continue to deliver new highs with more focus on sectors like defence, infrastructure, railways and core manufacturing sectors ahead of the budget scheduled on February 1, 2018.”
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 693.17 crore while domestic institutional investors (DIIs) had sold equities worth a net Rs 246.38 crore on Tuesday as per provisional data.
“Equity benchmarks ended at fresh record closing highs despite tepid global cues the investor sentiment was buoyed by government announcement of a lower borrowing target which drove down the bond yields. Some easing in crude prices also fuelled the market sentiment. Sector-wise, the rally was driven by banking & financials as well as technology, pharma, metals and select FMCG (fast-moving consumer goods) stocks,” said Sanjeev Zarbade, vice-president, Kotak Securities.