Banks led the rally on expectations of better loan growth while state-owned lenders gained on reports that the government is planning to increase foreign portfolio investors (FPI) holding limit in them.
The Nifty index closed over 18,000 for the first time since November 15, 2021, ending the day at 18,003.30, up 190.60 points, or 1.07%, from the previous close.
The Sensex ended up 650.98 points, or 1.09%, at 60,395.63.
All the sectoral indices ended in the green, with BSE Capital Goods, Realty, and Industrial indices gaining at least 2%. BSE Smallcap index rose 1.19%, while Midcap rose 0.69%. The Nifty PSU Bank index jumped 3.23%.
HDFC, ICICI Bank, and Infosys gained more than 2%.
“Markets have gained momentum in the past few days on the back of low impact of Omicron variant leading to less stringent restrictions/lockdowns by various government authorities,” said Siddhartha Khemka, head – retail research at Motilal Oswal Financial Services.
“This has raised hope of economic recovery along with expectation of strong corporate earnings.”
Foreign investors have turned net buyers in the first week of January by infusing Rs 3,202 crore in Indian equities after three months of selling nearly Rs 79,000 crore worth of stocks in the secondary market. However, they sold shares worth Rs 124 crore on Monday, as per the provisional numbers from the stock exchanges.
As many as 2,630 stocks, or 70%, out of 3,748 that traded on the BSE gained on Monday. Also, 976 stocks locked in upper circuit compared to 170 stocks that ended in lower circuit. The bullish trend is despite Citi on Monday downgrading India’s GDP forecast from 9.8% to 9%, citing slower economic momentum in the third quarter and Omicron uncertainty.
Analysts expect Nifty50 companies to report 12.1% year-on-year growth in aggregate revenue for the December quarter, making it the fourth consecutive period of double-digit revenue growth. Net profit is likely to rise 29.6%.
“We believe that an all-around calibrated economic recovery is on the cards, though the timing remains highly uncertain,” said Mitul Shah, head of research at Reliance Securities. “The recent rise in Covid cases in India is of concern now and how it would shape up in the coming days would be a key deciding factor for the market trend in the month. We would be monitoring the situation on recent Covid surge and Omicron issue.”
Technical charts, too, indicate strong momentum and buying interest with Nifty likely to touch 18,200 and 18,350 this week. “We do not expect any significant price correction as the undertone in both Nifty and Bank Nifty remains bullish,” said Ruchit Jain, lead research at online trading platform 5paisa.com. “On the flip side, 17,800 and 17,650 would be the immediate supports, and any dip towards it should be construed as a buying opportunity.”
