August 25, 2021 5:10:54 am
Aided by favourable global cues, the benchmark Sensex on Tuesday crossed 56,000 in intra-day trading again and closed at a new high just below the level. Despite concerns over high valuations, the 30-share index rallied 403 points to close at 55,958.98 and the NSE Nifty gained 128 points to 16,624.60 in the bull rally.
The strong rebound in broader markets along with favourable global cues bolstered optimism in Dalal Street, led by metal, banking and realty stocks.
After the gap-up opening, the indices traded range-bound in the first half of the day.
Analysts said the dominant trend in the market in August so far has been the weakness in the broader market and a flight to the safety of large-caps, particularly IT and defensives like FMCG stocks. In August, till now, the midcap index is down 8 per cent and the smallcap index by 10 per cent.
The outperformance of the IT Index (12 per cent rise in August so far) is a flight to quality triggered by high valuation concerns. The preference for defensives reflects growing concerns about high valuations and the possibility of a sharp correction. Nifty is likely to face resistance at higher levels as (foreign institutional investors) FIIs are in a sell mode.
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