The Sensex closed at 65,259, up 355 points, or 0.55%, after advancing as much as 514 points, or 0.79%. The Nifty, ended 100.20 points, or 0.52% higher, to close at 19,526. Both indices posted their best Muhurat trading gains in five years.
Infosys rose 1.4%, leading the gainers among Sensex stocks on Sunday. Wipro and Asian Paints were among the other gainers.
The Nifty Midcap100 index rallied 0.61% while the Nifty Smallcap 100 surged 1.14%. Of the 3,713 traded stocks, 78% advanced, while 19% declined.
The domestic trader community actively participates in the Muhurat trading session, making token transactions with an intent to take home profits. Making money in this hour of trading is considered auspicious, setting the tone for the year to come. Many brokers, traders and their family members were present at the customary Muhurat trading function held at the BSE’s Phiroze Jeejeebhoy Towers.
Investors must brace for sharp swings in the market and relatively modest returns in Samvat 2080 following the record-breaking rally in Samvat 2079, asset managers said. Uncertainty over the outlook for the US economy, heightened geopolitical risks and rich share valuations in India could keep investors on their toes.
Still, market participants expect double-digit returns in the new Hindu year.”The outlook for the Indian market in the upcoming year is favourable,” said Sunil Singhania, founder and CEO of Abakkus Asset Manager.
Eye on Fed Reserve Policy
He added, “Investors should not anticipate returns of 30-40% in mid and smallcap stocks, as seen in the previous year. With many global headwinds expected to subside and domestic macroeconomic indicators seen robust, the broader market should deliver decent double-digit returns in Samvat 2080.”
In September, the Sensex and Nifty reached record highs of 67,927 and 20,222, respectively. The indices have gained about 8-9% since the previous year’s Diwali, while the NSE Midcap100 and Smallcap100 indices jumped 32% and 37%, respectively, in this period, led by a rush of retail investor participation. About 26.1 million demat accounts were opened since the last Diwali.
Investor faith in the market could be put to the test with the US Federal Reserve expected to keep interest rates higher than what had earlier been expected. The direction of US bond yields and the dollar will drive the appetite for emerging markets such as India.
“With higher-for-longer interest rates, volatile bond yields, geopolitical conflicts, and fluctuating oil prices, Samvat 2080 will be quite a fascinating year to watch out for the global economy,” said Pranav Haridasan, MD and CEO of Axis Securities. “However, with the improvement in the balance sheet strength of corporate India and much-improved health of the Indian banking system, Indian equities will deliver double-digit returns in the next two-three years with the support of double-digit earnings growth.”