Sensex at 55K: Retail buyers drive rally amid excessive valuations

The Sensex on Friday crossed the 55,000-mark and hit a document excessive on sustained shopping for assist by retail buyers and mutual funds. Led by tech shares, the benchmark index shot up 593 factors,or 1.08 per cent, to shut at 55,437.29 and the Nifty50 rose by 165 factors, or 1.01 per cent, to 16,529.10, at the same time as specialists cautioned retail buyers to be additional vigilant and suggested in opposition to placing cash in shares when valuations are excessive.
The fairness market rally raged by way of the frontline indexes and the main sectors amid the optimism on future earnings and the restoration on the financial entrance. The present week noticed the Nifty and Sensex touching all-time highs, inviting even these on the side-lines to affix the rally. TCS shot up by 3.22 per cent. However, mid-and small-cap indices remained sluggish. The IT index gained 1.54 per cent, capital items 1.8 per cent and capital items 1.58 per cent.
Meanwhile, the rupee reversed its intra-day losses to shut nearly flat at 74.24 in opposition to the US greenback on Friday, monitoring a powerful rally in home equities. Besides, a weak buck in opposition to its main rivals and decrease crude costs additionally helped the rupee to get better.

Retail buyers and mutual funds are driving the continuing bull rally, analysts mentioned. The retail holding of NSE-listed corporations hit a document excessive of seven.18 per cent within the June quarter, consistent with the sharp rise in new investor accounts during the last 18 months and a bounce in retail participation in each secondary and first markets. It stood at 6.42 per cent in December 2019. “Retail investors are buying stocks without any serious consideration for value. Now, we don’t know when and how this rally will end. But we know it will end … and when it does, the new retail investors who have flocked to market recently will be hit hard,” mentioned V Ok Vijayakumar, chief funding strategist, Geojit Financial Services.

On the opposite hand, aided by new fund provides and bullish inventory markets, fairness mutual funds noticed document inflows price Rs 22,583.52 crore in July, in comparison with Rs 5,988.17 crore in June. “The market has not seen a correction in the recent past. Investors should not burn their fingers in the rally,” mentioned BSE dealer Pawan Dharnidharka.