5 Reasons Why Indian Share Markets Closed At Record Highs Today

Indian share markets extended gains as the session progressed and ended on a strong note.

Both the benchmark indices logged their respective fresh lifetime highs in intra-day deals, with the NSE Nifty index hitting 13,000 for the first time ever.

At the closing bell, the BSE Sensex stood higher by 446 points (up 1%).

The NSE Nifty closed higher by 129 points (up 1%).

Axis Bank and HDFC Bank were among the top gainers today.

The SGX Nifty was trading at 13,116, up by 175 points, at the time of writing.

The BSE Mid Cap index ended up by 0.6%. The BSE Small Cap index ended up by 0.9%.

On the sectoral front, gains were largely seen in the banking sector, the automobile sector, and finance sector.

Asian stock markets ended higher today as progress in developing an inexpensive coronavirus vaccine boosted hopes of a swift global economic recovery.

As of the most recent closing prices, the Hang Seng ended up by 0.4% and the Shanghai Composite ended down 0.3%. The Nikkei rose 2.5%.

US stock futures are trading higher today indicating a positive opening for Wall Street indices. Nasdaq Futures are trading up by 43 points (up 0.4%), while Dow Futures are trading up by 273 points (up 0.9%).

The rupee is trading at 73.90 against the US$.

Gold prices for the latest contract on MCX are trading down by 1% at Rs 49,003 per 10 grams.

Domestic gold and silver prices fell sharply today, continuing their weak trend of recent weeks.

In the previous session, gold prices had slumped Rs 750 or 1.5% per 10 gram while silver had tumbled Rs 1,628 or 2.6% per kg.

In global markets, gold rates dropped to the lowest level in four months amid optimism over Covid-19 vaccine developments.

After hitting a record high of Rs 56,200 in August, gold prices have slumped amid vaccine progress and the recent outflow from gold-backed exchange-traded funds.

Here are Top 5 Factors Why Indian Stock Markets Rallied Today

Vaccine Progress: AstraZeneca said its Covid-19 vaccine, cheaper to make, easier to distribute, and faster to scale-up than its rivals, could be as much as 90% effective.

Improving Business Activity: US business activity expanded at the fastest rate in more than five years in November led by the quickest pickup in manufacturing since September 2014, fueling optimism of a swift recovery.

Positive Global Markets: Asian shares edged higher today as progress in developing an inexpensive coronavirus vaccine boosted hopes of a swift global economic recovery while European shares gained as a possible easing of lockdowns in France added to a brighter mood from encouraging developments related to coronavirus vaccines.

Banking Stocks Rally: Stocks from the banking sector witnessed huge buying interest today with the Nifty Bank index rising as much as 2.5%. Axis Bank, HDFC Bank, SBI, ICICI Bank and Kotak Mahindra Bank gained in the range of 2-4%.

FII Inflows: Foreign institutional investors continued to pour in money into Indian share markets. FIIs invested nearly Rs 510 billion in the month of November, which is the highest every monthly flow into Indian equities.

Moving on to stock-specific news...

Adani Ports and SEZ was among the top buzzing stocks today.

Shares of Adani Ports and Special Economic Zone jumped 7% intraday today after the company said it ranked 14th in the transportation and transportation infrastructure sector of Dow Jones Sustainability Emerging Markets Index, 2020.

Adani Ports is the only company from India to have been included in this sector.

Adani Ports is the sole company in the transportation and transportation infrastructure sector from India and has been selected as an index component of the Dow Jones Sustainability Indices (DJSI), the company said in a press release.

Adani Ports and SEZ share price ended the day up by 4.5%.

In news from the banking sector, AU Small Finance Bank on Monday sold 3.5 million shares or 4.5% stake of mortgage financier Aavas Financiers for Rs 5.3 billion in an open market transaction.

The shares were bought by Nomura India Investment Fund Mother Fund and SBI Life Insurance.

Aavas Financiers, earlier known as Au Housing Finance was sold to private equity firms Kedaara Capital and Partners Group by its parent Au Small Finance Bank in 2016.

Moving on to news from the defense sector, Hindustan Aeronautics (HAL) has proposed a defense financing corporation for the acquisition of weapon systems such as aircraft and warships to bring in much-needed resources for the armed forces struggling with dipping capital budgets.

Proposed to be set up in line with the Indian Railways Finance Corporation, the new body could raise funds from the capital market and provide more stability to defense purchases that are often delayed due to the unavailability of capital.

Reportedly, HAL prepared the proposal after reaching out to major banking institutions that gave positive feedback and further decisions on the matter would be taken by the defense ministry.

Note that India has been trying to find ways to raise the defense budget that has been slipping in real terms over the past years as the pension and salary bill has ballooned.

The Finance Commission had also been tasked with finding ways to raise funds for defense modernization but a plan to create a non-lapsable fund out of the divisible pool of central taxes has met with objections from states. The defense ministry has also recommended levying a special cess to the Finance Commission.

In the current financial year, Rs 1.15 lakh crore was allocated for weapon acquisition, an increase of Rs 103.1 billion.

Note that with big-ticket divestment plans hit by the Covid-19 pandemic, the government is readying public-sector companies for minority stake sales in the remaining months of the current fiscal.

So far this fiscal, the government has raised Rs 61.3 billion by selling a minority stake in Hindustan Aeronautics and Bharat Dynamics through an offer for sale (OFS). The government also divested 15.2% in Mazagon Dock Shipbuilders through an initial public offering.

Speaking of the defense sector, have a look at the chart below which shows the top 5 military spending countries in the world as of 2019:

According to a SIPRI (Stockholm International Peace Research Institute) report, India was the third-largest military spending country in the world in 2019.