Vaccine High: Sensex to summit 50k mark, budget to give added boost

India's bellwether index -- Sensex -- is expected to cross the 50,000 points-mark, even before the first FY22 budgetary announcements are made, as investors, both foreign and domestic, have bet big on the upcoming vaccination drive and quarterly earning season.
Besides, seasonal factors such as active FII inflows, abundant global and domestic liquidity as well as rising consumption trend, have investors glued to their stock holdings.
Even volatility induced via profit booking is not hampering the market's up moves as every dip is seen as a buy in opportunity into the never ending bull run.
"We are barely 4 per cent away from the 50,000 mark. If the inflows continue and global markets continue to be supportive, we can reach that number very soon," said Deepak Jasani, Head of Retail Research at HDFC Securities.
"As long as interest rates globally remain low, equity inflows could continue as the outlook on economic improvement remains bright."
In calendar year 2020, India received $22.5 billion or Rs 1.7 lakh crore worth of FII money for equities.
Earlier, the lockdown induced market crash led to cheaper valuations which attracted foreign investors.
Furthermore, a global flood of liquidity and near zero interest rates in foreign markets accelerated these inflows.
"Strong global risk appetite led by constructive backdrop of stimulus and vaccine front, along with positive January seasonality effect for global equities should augur well for the India equities too" said Emkay Global's Lead Economist Madhavi Arora.
Historically, a positive January effect points to the heightened FII activity in the market post the New Year break.
"Healthy liquidity conditions have triggered the market's upmove," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
"This trend is likely to last as expectations of better Q3 results, company's outlook commentary and the build up to budget will boost both Nifty and Sensex to new highs. It is highly likely that Sensex will be able to cross the 50,000 points- mark and Nifty 14,500 points-mark within a short span of time."
India Inc is widely expected to come out with healthy third quarter results on the back of higher-than-expected sales during the festive season.
According to Likhita Chepa, Senior Research Analyst at CapitalVia Global Research: "The possibility of Sensex hitting 50,000 in the near term looks high since the recent rally is being supported by value buying, FII inflows into Indian markets and hopes over economic recovery."
"Strong quarterly results, budget focusing over revival and growth and improving economic data in the coming quarter is expected to add further strength to the market and eventually test its psychological resistance level of 50,000."
"The speed of the vaccine roll out and its impact on consumers will be a major driver in order to drive growth as well as funds into domestic markets."