Markets Likely To Remain Strong Led By Banks, Consumer Durables: Analysts

Analysts say they expect the rupee to have a strengthening bias against the US dollar, and act as a headwind for export-oriented sectors such as IT services.

Markets Likely To Remain Strong Led By Banks, Consumer Durables: Analysts

The Sensex gained 4,384.94 points, or 11.23%, in Samvat 2076

Domestic stock markets will have their first full session of Samvat 2077 on Tuesday, after benchmark indices Sensex and Nifty soared to record highs in special Muhurat trading on Diwali. The Sensex rose 194.98 points to settle at 43,637.98 for the day and the Nifty climbed to 12,780.25 - both record closing highs. Going forward, analysts say the markets are expected to remain strong, fuelled by continued foreign inflows, and a positive trend in sectors such as banking, consumer durables, cement, construction and metals.

(Also Read: Diwali - A Good Time To Start The Investment Journey)

"Participation  by clients in the special Muhurat trading session was enthusiastic, as Nifty and Sensex are at all-time highs, global markets are resilient and the Q2 earnings season has been very strong," said Hemang Jani, head of equity strategy, broking and distribution at Motilal Oswal Financial Services.

"Markets are likely to remain strong as flows into emerging markets have improved in November, and the government has been taking steps to revive the economy," he added. 

Last week, the government unveiled a third set of measures, worth Rs 2.65 lakh crore, as part of its Atmanirbhar Bharat stimulus to rescue the economy out of a historic contraction caused by the coronavirus pandemic.

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"With recent news on progress of an effective vaccine against COVID-19, we appear closer to the end of a difficult period for society at large. Despite a year where governments have had to balance conflicting interests of physical well-being of citizens and economic stability, financial markets have largely worked efficiently in pricing risks and appear to point to an upcoming period of rapid progress," said S Hariharan, head-sales trading at Emkay Global Financial Services.  

The markets have recently broken a series of records amid a broader global surge in risk appetite on optimism around a coronavirus vaccine.

"As the combination of fiscal and monetary stimulus kicks in along with a broad re-opening of the economy, we can expect earnings growth in the coming couple of years to be robust," he added. 

Positive on banks, consumer durables, cement, real estate, metals and road-builders, Mr Hariharan said: "As a domestically-oriented economy, we expect the coming year to be favourable for pro-cyclical sectors.''

With contained inflationary pressures, he said he expects the rupee to have a strengthening bias against the US dollar, and act as a headwind for export-oriented sectors such as IT services.

(Also Read: Sensex Gains 11% In Samvat 2076)

In Samvat 2076, which is the period from Diwali 2019 to the eve of Diwali 2020, the Sensex gained 4,384.94 points, or 11.23 per cent, and the Nifty climbed up 1,136.05 points, or 9.81 per cent.