Sensex, Nifty rise for 2nd day to extend Modi rally

NEW DELHI: The domestic equity indices rallied for a second straight session on Monday amid optimism that Prime Minister Narendra Modi coming back to power will spur economic growth over the next five years.

Strong support from institutional investors in form of high inflows also boosted equities. Crude oil prices traded stable, below the $69 level.

Bank stocks in addition to shares of Tata Steel, L&T and NTPC added to market gains.


BSE Sensex gained for a second day and closed 249 points or 0.63 per cent higher at 39,683. While its NSE counterpart Nifty ended at 11,925, up 81 points or 0.68 per cent.

Market at a glance
In the 30-pack Sensex, 18 out of 12 stocks ended in the green. Tata Steel, with a rise of 5.46 per cent, was the best performing stock. YES Bank, NTPC, L&T, Axis Bank and SBI were other stocks that joined Tata Steel on the gainers list.

Meanwhile, IndusInd Bank, Reliance Industries, Asian Paints, ONGC and Bharti Airtel suffered losses, declining up to 2 per cent.

In the broader market, Manpasand Beverages took a big hit. The scrip hit a lower circuit of 20 per cent after the company MD and CFO were arrested on allegations of GST fraud.

The BSE Midcap and Smallcap indices outshone benchmark Sensex. The midcap jumped 1.13 per cent while the smallcap 1.77 per cent.

Five of 19 sectoral indices ended in the red. BSE Capital Good logged the most gains, ended up 3.06 per cent higher. Power, Industrials, Utilities, Metals, Basic Materials and Realty too witnessed a strong session. Each of these indices rose over 2 per cent.

Factors that boosted stocks

Hopes of strong economic reforms
The return of Narendra Modi at the Centre buoyed hopes of strong reforms that would boost the economy and would mean well for the Indian markets too.

"Sentiment remained buoyant expecting the better outlook for the economy with the return of Modi government to power. Thereby the domestic equity market registered sharp gains in today's session and ended up by 0.6 per cent, despite weakness in Asian peers," Rajnath Yadav, Sr. Research Analyst, Choice Broking said.

Strong FII inflows
The news Modi government's return also buoyed sentiment among foreign investors leading to heavy buying from them in equities. The FIIs in the last five sessions have bought Rs 2,738 crore worth of stocks, which bodes well for the rupee as well.

Expert Take
It is very attractive to invest in midcaps and small caps in spite of runaway in prices during the last few trading sessions. The economy is expected to revamp from the second half of FY20 led by growth agenda. On average they are available at one year forward P/E of 15x compared to an average of 18x in the last 5-year with a peak of 25x. The undercurrent is expected to be buoyant with hope over the upcoming final budget
- Vinod Nair, Head of Research, Geojit Financial Services