Sensex, Nifty today: The Indian stock market witnessed a robust rally on Friday after US Bond yields calmed with global markets edging up. Indian Benchmarks surged over a per cent signalling strong investor interest with the IT sector coming out on top. The Nifty IT index was trading above 37,500 level, up by over 450 points or 1.25%.
On Friday, the NSE Nifty index concluded the trading session above the psychological 24,850 level, up by more than 240 points. Whereas, BSE Sensex surged by 769 points or 0.95% to settle at 81,721 level mark. Almost all stocks from the Sensex 30 pack were trading in green except Mahindra and Mahindra and Sun Pharma. Eternal (formerly Zomato), ITC, Powergrid, Bajaj Finserv and Adani Ports were among the top gainers from the Sensex pack.
Here's what's lifting the market sentiment-
Valuation Recovery
While valuations might have risen again, they are still below last year's peak. Plus, the rally is now supported by fundamentally stronger companies, not just overpriced or hyped stocks. This signals a healthier and more sustainable market trend.
"While headline PE has partially re-inflated — the Nifty 50 from 21x to 23x and the Nifty MidCap 150 from 34x to 39x — they remain below their respective September 2024 peaks of 25x and 45x, respectively. More importantly, the underlying mix has shifted meaningfully," Elara Capital said in a recent report.
When the market was trading at its peak, several stocks that later declined sharply, like Bajaj Auto, Trent and Kalyan Jewellers, were trading at very high valuations, far above their long-term averages.
In contrast, the recent market rebound has been driven by companies with more reasonable valuations, such as ICICI Bank, Reliance Industries, BSE and HPCL. These companies not only showed strong earnings growth but their rising stock prices were backed by real improvements in performance, not just market hype.
Sectors to Watch
"Even when the market turns weak domestic demand-driven segments like financials, telecom, aviation etc are resilient and this is reflected in the strength in the stock prices of the big boys in these segments like ICICI Bank, Bharti Airtel and Interglobe Aviation. This message from the market is important," VK Vijayakumar, chief investment strategist, Geojit Investments Ltd.
While the recent Q4 results failed to bring fresh surprises in India Inc.'s bottom line figures, they were largely in-line with what the D-street was expecting. Meanwhile, analysts believe that strong domestic macros owing to declining inflation trend and easing interest rates might have also contributed to Friday's rally.
"The silver lining from the market perspective is India’s strong macros particularly the resilient growth and declining inflation and interest rates," said Vijayakumar said.
