Benchmark indices today scaled new record highs, extending gains for the third consecutive session riding on corporate earnings and positive global cues.
BSE Sensex rose as much as 0.5% to hit a record high of 30,105, surpassing its previous milestone hit of 30,024 in April 2015 while the broader Nifty50 index also witnessed new peak of 9,354, its second consecutive all-time milestone, after breaching the 9,300-mark for the first time yesterday.
The market rally comes after a string of solid domestic quarterly results, while hopes for additional foreign inflows to India have increased on renewed optimism about the US economy. The first round of an election in France in favour of the market's preferred candidate contributed to the rally.
"Nifty reached record high crossing the 9300-level on positive sentiments domestic and global. Political outcomes in European elections and geopolitical tensions escalating will keep things interesting on the global news flow side, while the monsoons panning out and GST implementation should keep us on our toes domestically," Kunj Bansal - Executive Director & CIO – Equity , Centrum Wealth Management.
Adding, he said: "Even though there is not much growth expectation from March quarter nos, if market still continues rising, it signals that it has started to discount FY19 and FY20 earnings growth numbers with mid-teens growth. The outperformance of the midcap and small cap segment over the large cap in the last year added to the gains. If one adds the consistent domestic mutual fund we may find support not being far in case of a correction."
Globally, Asian stocks also rallied as Wall Street hit new peaks while the euro consolidated recent gains as immediate concerns of political uncertainty in the euro zone receded.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%, hovering near their highest since June 2015. Stock markets in Japan and Australia led gainers.
Here are 5 reasons that led to the rally in Dalal Street:
Investors await tax announcement
Investors eagerly await US President Donald Trump's "big tax reform and tax reduction" announcement due later in the day. As per media reports, Trump's plans would include a slashing of the corporate tax rate and lower taxes on offshore earnings stockpiled by US companies overseas.
Trump has directed aides to move quickly on a plan to cut the corporate income tax rate to 15 percent from 35 percent, a Trump administration official told Reuters.
Relief from French polls
Relief rally was triggered in the global markets after pro-centrist and market favourite Emmanuel Macron won the first round of French Presedential elections. Macron won first round vote with 23.91%. Far-right nationalist and anti-euro candidate Marine Le Pen came in second with 21.42%, almost exactly as earlier polls predicted.
Later, the French far-right presidential hopeful Marine Le Pen stepped down as leader of her National Front (FN) party to focus on gathering a large number of voters ahead of the decisive round, to be held on May 7.
Rupee below 64/$
Rupee strengthened past the 64 mark against the US dollar for the first time since in over an year, tracking the gains in the global equity markets.
The currency opened at 64.16 a dollar and touched a high of 63.96, a level last seen on 10 August 2015. It gained 6.4% in last 3 month becoming the best performing currency in Asia.
Inflows from Foreign and Domestic investors
The foreign institutional investors (FIIs) were net buyers in the Indian equity market on April 25, helping the major indices hit their respective record highs. The domestic institutional investors have been pouring funds in the markets for past many trading sessions.
As per the data available at the NSE, FIIs poured in Rs 178.82 cr in the markets on Tuesday while DIIs also bought shares worth 998.26 crore.
Optimistic Corporate earnings
Solid March-quarter results also added to the rally on Dalal Street with blue chip firms like RIL and Wipro surging post earnings report.
Reliance Industries hit a nine-year high, adding Rs 5,242 crore to its market valuation, after the company reported 12.3% year on year (Y-o-Y) growth in consolidated net profit at Rs 8,046 crore for the fourth quarter ended March 2017 (Q4FY17).
Wipro on the other hand was the top gainer of the day after the IT major’s fourth-quarter profits grew 0.4% to Rs 2,267 crore on a 2.6% higher revenue of Rs 13,987.5 crore, as the digital, energy and utilities business increased.
17 companies are scheduled to report their results for the March-quarter today including Axis Bank, GIC Housing Finance, Lakshmi Vilas Bank, Tata Sponge Iron, Sterlite Technologies, KPIT, and KSB Pumps.