The Indian market seems to be in a festive mood as the benchmark indices have hit record highs. The gala season is being strengthened by India’s vaccination drive that recently crossed the 100-crore mark. The economy, too, has shown significant improvement on the back of pent-up demand and faster growth is expected in the future.
Improvement in the consumption-related data, ease in monetary policy, several measures taken by the government to incentivise sectors to create a global supply chain, tariff protection and relaxation in foreign investment norms have all contributed to the recovery.
The optimism has positively replicated on the technical charts as well. Even normalisation of economic activity has not led to a significant jump in the coronavirus infections.
While the government is focused on the revival of the economy, this is an opportunity for fundamentally sound companies to gain market share.
The strong performance by the BFSI in the second quarter shows that the banking sector has weathered the difficult time well, with several lenders seeing an increase in profits.
The banking, financial services and insurance sector, which is the backbone of the economy, has finally witnessed a breakout and could be the main driver for the market.
Even public sector banks have seen a strong recovery after a long time, indicating a progressive movement in the sector.
Amid the festivities, a rise in the consumption-related sector is expected and hence should be in focus. The second-quarter earnings have already manifested that the volumes and liquidity have soared and the same is expected during the next rounds of quarterly earnings.
Apart from the robust performance of the listed companies, liquidity is likely to be poured into initial public offerings such as Paytm, Nykaa, LIC and Policybazaar. Many more companies are likely to enter the primary market in the near term.
While the equity market has reacted emphatically to the historical news of vaccination drive, liquidity and strong fundamental growth remain the major reasons behind the rally.
The market is expected to perform well, with the focus primarily on economy-linked sectors. The banking and financial services segment, along with the technology industry, could lead a decisive move wherein the benchmark index Nifty is likely to test fresh lifetime highs of 19,000 over Diwali.
An overview of the global market should be kept ahead of the festivities as huge cash flows can be expected in the duration.
The Samvat 2078, which begins on Diwali, November 4, is most likely to be driven by the bulls of Dalal Street and the gala season will continue throughout the period.
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