The strong surge in equities, that started on Friday on the back of a cut in corporate tax rates and other incentives for India Inc., continued on Monday with the benchmark indices registering their best-ever two-day rally.
The 30-share Sensex gained 1,075.41 points, or 2.83%, to close above the psychological 39,000-mark at 39,090.03. The index has gained almost 3,000 points — 2,996.56 to be precise — in just two trading sessions.
Index constituents like L&T, ITC, Axis Bank, Kotak Mahindra Bank, ICICI Bank, Asian Paints and Indusind Bank all gained more than 6% each. Index heavyweights like HDFC and HDFC Bank also gained 5.22% and 4.86%, respectively.
Meanwhile, the broader Nifty closed at 11,600.20, up 326 points or 2.89%.
Friday’s announcements have made market experts turn bullish on the outlook for the equity market on the back of expected improvement in corporate earnings.
“The combination of monetary and fiscal stimulus should help revive India's growth rate... We raise our June 2020 BSE Sensex target from 40,000 to 45,000... reflecting higher earnings prospects rather than higher multiples,” stated the latest India strategy report by Morgan Stanley.
The global financial major expects the next set of triggers could be a rate cut by the Reserve Bank of India, disinvestment and sovereign bond issue, among others.
Interestingly, foreign portfolio investors were significant buyers on Monday as provisional data pegged their net buying at ₹2,684 crore. Foreign investors have ended most days in the recent past as net sellers even as the government took steps to waive tax surcharge that was announced in the Union Budget.
On the other hand, domestic institutional investors (DIIs), who had been supporting the markets with huge buying on a daily basis, were net buyers at ₹291 crore on Monday.
Meanwhile, the renewed investor confidence was clearly visible with more than 1,600 stocks gaining ground on Monday, as against 981 declines. Some of the sectoral indices, representing fast moving consumer goods, financials, banking, capital goods, consumer durables and energy, gained over 3% each.