Nifty closes above 9000 for 1st time, Sensex up 496pts on BJP#39;s emphatic UP victory

After a long weekend, the market staged spectacular rally Tuesday, with the Nifty closing above 9000 level for the first time on hopes of BJP strengthening reform agenda following emphatic victory in Uttar Pradesh and Uttarakhand. Better-than-expected January industrial output (growing 2.7 percent) also aided sentiment.

The 30-share BSE Sensex surged 615.7 points intraday but failed to hit its record high of 30,024.74 touched on March 4, 2015. It closed up 496.40 points or 1.71 percent at 29,442.63, the highest level in last two years.

The 50-share NSE Nifty hit an intraday all-time high of 9,122.75 and stayed above psychological 9,000-mark throughout the session. It was up 152.45 points or 1.71 percent to end at 9,087, backed by banks, FMCG and infra stocks.

With this rally, experts say the market digested BJP’s victory and now all eyes are on outcome of two-day Federal Reserve policy meeting due Wednesday night.

Victory in UP elections raised Narendra Modi’s win probability for the 2019 national elections, says CLSA which expects the government to focus more on social agenda.

It expects market multiples to stay elevated on back of robust domestic flows.

While maintaining 2017 peak Nifty target range of 9,300-9,600, JPMorgan says from hereon, it believes earnings will have to do the heavy lifting. It expects meaningful recovery from second half of next financial year and forecasts 15-18 percent YoY earnings growth.

Meanwhile, Jayant Manglik of Religare Securities suggests keeping bullish tone but with a word of caution, considering the possible volatility ahead on Fed meet.

The broader markets underperformed benchmarks, with the BSE Midcap and Smallcap indices gaining 1.4 percent and 1.2 percent, respectively. The gap between advances and declines also narrowed as the day progressed. About 1700 shares advanced against 1153 declining shares on the BSE. In opening, the ratio was 5:1.

Meanwhile, inflation based on wholesale prices jumped to 39-month high of 6.55 percent in February because of costlier food and fuel items. This was higher than 5.25 percent reported in previous month and also higher than what the street was anticipating (6.08 percent).

All sectoral indices except Metals ended in the green. The Nifty Bank also ended at record closing high, up 1.81 percent as ICICI Bank posted best one-day gain in last 5 months, up 6 percent.

Sun Pharma gained 3.6 percent after the drug maker said it was informed by USFDA, that it will lift the import alert imposed on the Mohali manufacturing facility and remove the facility from the official action initiated (OAI) status.

HDFC, L&T, Asian Paints, ITC, HUL, Infosys, Maruti Suzuki and Adani Ports among others rallied 1.5-4.5 percent.

Coal India was biggest loser among Sensex 30 stocks, down 6.6 percent on adjustment for interim dividend. Axis Bank, Bharti Airtel, GAIL and Bajaj Auto were other losers.