Indian equities end higher amid F&O expiry; financials, IT stocks lead gains

The benchmark Sensex settled at 51115.22 points, up 0.19%, whereas Nifty ended 0.45% higher at 15,337.25.

“Domestic equities have been mostly resilient throughout second wave of pandemic as absence of national lockdown, availability of vaccine and continued industrial/manufacturing/infrastructure activities albeit at slow pace with favorable supply chain offered comfort to investors. A sharp drop in daily caseload in second wave and improvement in recovery rates have emboldened investors in last one week. Further, robust 4QFY21 earnings and favorable commentaries from managements also lifted sentiments,” stated Binod Modi, Head Strategy at Reliance Securities.

Going forward, the likely announcement of phased withdrawal of state level lockdowns and a recovery in economic activities can aid the market sustain the rally, Modi added.

The unabated surge in domestic equities and asset worth inflation despite the economic contraction within the wake of the pandemic poses the risk of a bubble, the Reserve Bank of India (RBI) stated in its 2020-21 annual report, released on Thursday.

“Market gained its momentum in the opening hours on hopes of a state-wise unlocking due to declining covid cases. However, RBI’s warning of the risk of a bubble in the equity market in its annual report made the market cautious, forcing it to end flat on the day of the monthly F&O expiry. RBI has noted a disconnect between the market and economy due to Covid. The equity market is valued based on its future earnings growth proposition, which is solid for India today. High liquidity does help the market and RBI has reaffirmed its supportive stance till the economy recovers” stated Vinod Nair, Head of Research at Geojit Financial Services.