RBI forecast, foreign portfolio investments flows push Sensex past 45,000

The Sensex on Friday closed above the 45,000-mark for the first time, while the Nifty50 logged a new high of 13,259.

The benchmark indices gained for the fourth straight session and fifth straight week — the longest run of weekly gains since July.

Friday’s gain of 1 per cent was after the RBI revised its gross domestic product target for the current fiscal year and kept rates unchanged despite high inflation. The central bank expects the economy to contract 7.5 per cent in FY21, against the earlier estimate of 9.5-per cent de-growth.

The Sensex closed at 45,079, with a gain of 447 points, or 1 per cent. It has rallied 5,000 points, or 15 per cent, since November without any meaningful correction.

RBI Governor Shaktikanta Das said the economy is expected to show positive growth in the second half of FY21. The economy saw normalisation of activity in the second quarter.

Further, the RBI said the Indian economy had exhibited stronger-than-expected pick-up in the momentum of recovery.

Stocks linked to the real economy, such as banks, cement, and consumer goods, rallied on positive commentary from the RBI.

“The RBI’s statement reiterated it is not going to worry too much about inflation at this point and is going be accommodative. That was all the support the market needed,” said Andrew Holland, chief executive officer, Avendus Capital Alternate Strategies.

Globally, renewed US stimulus negotiation and vaccine roll-out kept investor sentiment buoyant.

Asian shares scaled a record high on Friday on growing prospects of a large US economic stimulus package.

Analysts said with the trigger of the RBI policy out of the way, markets globally can look forward to rising chances of an early US economic stimulus package.

“With all the major events behind us, we feel global cues would dictate the market trend ahead. Besides, news related to Covid vaccines will also be in focus. Mostly rate-sensitive ended on a strong footing, and we may see follow-up buying next week. Traders should not get carried away with the prevailing buoyancy and stick to quality names as we can’t ignore the possibility of an intermediate corrective phase,” said Ajit Mishra, vice-president-research, Religare Broking.

Two hundred and seventy-four stocks hit their 52-week high, and 383 stocks were locked in the upper circuit on the BSE.

The market breadth was positive, with total advancing stocks at 1,606 and those declining at 1,286 on the BSE. All the Sensex components, barring five, ended the session with gains.

ICICI Bank was the best-performing Sensex stock. It ended the session with a gain of 4.2 per cent. Barring one, all the BSE sectoral indices ended the session with gains.

Banking and telecom stocks gained the most, and their gauges rose 2.1 per cent and 1.8 per cent, respectively.

Aviation and travel stocks posted strong gains after the government lifted the cap on domestic flights to 80 per cent of pre-Covid levels. InterGlobe Aviation rallied 6 per cent, SpiceJet rose 10 per cent and jumped 15 per cent.