Indian markets slowly rose to new highs amid a volatile session on Wednesday. The 30-share Sensex ended up trading above the 44,000 mark for the first time, closing at 44,180.05, an increase of 227.34 points or 0.52%, although the increase in Covid-19 cases has impacted investor confidence. The Nifty ended at 12,938.25, an increase of 64.05 points or 0.50%.
Markets in other Asian regions were mixed as investors remained cautious due to the continued rise in COVID-19 cases, despite expectations about the arrival of the vaccine. On Tuesday, US Federal Reserve Chairman Jerome Powell also warned that the increase in cases is a concern for an economic recovery that has “a long way to go.”
“Domestic equities continued to move north, mainly led by a rebound in finance and automobiles. Strong buying in mid- and small-cap stocks continued, which was well in line with expectations. A healthy improvement in the financial earnings outlook and visibility into asset quality continued to support financial stocks. We believe that Nifty is about to hit the psychological 13,000 mark shortly as the underlying strength remains intact, “said Arjun Yash Mahajan, director of institutional business at Reliance Securities.
However, the rapid rise in Indian markets may lack fundamental support as valuations appear to be overheated and may concern investors. Sensex and Nifty trade at 21.95 times and 21.48 times, respectively, based on Bloomberg’s one-year price-earnings (PE) estimates.
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