Sensex scaled the 46,000 mark for the first time in afternoon trade today. Nifty too hit the 13,500 level supported by positive sentiment on Dalal Street. While Sensex rose 556 points to 46,164, Nifty climbed 156 points to 13,558.
On Tuesday, Sensex and Nifty had closed at record highs. Sensex ended 181 points higher at 45,608 and Nifty closed 37 points higher at 13,392.
With today's rally, Sensex has gained 11.70% since the beginning of this year and Nifty has risen 10.90% during the same period. Sensex and Nifty have gained 8.18% and 8.38%, respectively in one month.
Top gainers on Nifty were UPL, IOC, Kotak Bank, HDFC Bank and Axis Bank rising up to 3.50% in afternoon trade.
Of 50 Nifty stocks, 31 gained and 19 were in the red. Hindalco, Shree Cements, Wipro, and Maruti were the top losers on Nifty.
Here's a look at five factors which led to the rally in stock markets today
Vaccine hopes
Hopes of a COVID -19 vaccine fuelled the rally in Sensex and Nifty today. According to a Reuters report, Modi government may clear some coronavirus vaccines over the next few weeks and an estimated 300 million people would be innoculated in the first tranche. The statement follows Pfizer, Serum Institute of India and Bharat Biotech seeking emergency use authorisation for COVID-19 vaccines in the country.
Serum Institute of India (SII), the world's largest vaccine producer by volume is close to inking a deal with the Centre. The Pune-based company is likely to sign a supply contract with the central government, under which the price of the COVID-19 vaccine may be fixed at Rs 250 per dose.
Bharat Biotech has also sought emergency-use authorization from DCGI for its COVID-19 vaccine, called Covaxin, which it is developing in collaboration with the government-run Indian Council of Medical Research.
Meanwhile, drugmaker Pfizer Inc has become the first company to seek emergency use approval of its vaccine candidate in India after getting clearance in the UK and Bahrain.
FII inflows
Strong FII inflows in November and December have turned sentiment positive toward the Indian benchmark indices. In December alone, FIIs infused Rs 16,908 crore in first six sessions. In November, FIIs bought a record Rs 65,317 crore worth equities in Indian markets.
Global markets
World shares chugged higher on Wednesday after another round of record highs for major indexes on Wall Street, as hopes flared once again for a new round of aid for the US economy. Britain's FTSE 100 gained 0.6% to 6,598.16 and Germany's DAX picked up 0.5% to 13,353.28. The CAC 40 in France added 0.% to 5,583.52. Wall Street looked set for an upbeat start, with the future contract for the S&P 500 up 0.2%.
The futures for the Dow industrials were 0.3% higher.
In Asian trading, Tokyo's Nikkei 225 index gained 1.3% to 26,817.94, while the Hang Seng in Hong Kong added 0.8% to 26,502.84. In South Korea, the Kospi jumped 2% to 2,755.47. Australia's S&P/ASX 200 advanced 0.6% to 6728.50, while the Shanghai Composite index slipped 1.1%, to 3,371.96.
US economic stimulus
Investors were buoyed by reports that lawmakers and the White House were in the process of finalising fresh stimulus for the US economy. A bipartisan group of senators and members of the House have announced a new $908 billion plan for emergency Covid-19 relief funding on Tuesday.
COVID-19 vaccine: 3 out of 24,000 participants react adversely to Oxford-AstraZeneca candidate
Economic recovery
Recovery in the Indian economy during the second quarter of the current fiscal has also turned sentiment bullish on Dalal Street. Contracting for the second consecutive quarter, India's GDP fell 7.5 per cent during September quarter, albeit much slower than 23.9 per cent decline registered in June quarter, signalling a rebound. The better than expected growth was primarily due to significant rebound in the sectors like manufacturing, construction and 'trade, hotels, transport, communication & services related to broadcasting'.