NEW DELHI: If you think the stock market is getting its winning touch back, you probably are not wide of the mark.The BSE benchmark Sensex surged 350 points and the Nifty50 set its sights on the 10,800-mark on Thursday, headed for gains for the second straight session.
Why is there a frenzy of buying interest on StreetGlobal markets: The rise in domestic market had much to do with the surge in stocks globally.
Asian shares were ruling at two and a half month high on Thursday, tracking a higher overnight close on Wall Street.Hong Kong's Hang Seng's was up 0.7 per cent, followed by Kospi and TWSE.
There was optimism all around over the improving health of global economies as ECB chief economist Peter Praet on Wednesday said the regional central bank is confident of inflation hitting its target.
Meanwhile, all eyes were on G-7's Quebec meet scheduled for Friday and Saturday.
It will be the first chance for G-7 leaders to meet Trump in person since US tariffs on steel and aluminium imports from Canada, Mexico and the European Union were imposed last week, Reuters reported.
Banking rally: Banking and financial stocks contributed most to the Sensex rise.
The RBI on Wednesday announced a slew of changes pertaining to banks and NBFCs such as changes in the method for valuation of state government securities, revision in housing loan limits for PSL eligibility, aligning objectives with PMAY and increase in Liquidity Coverage Ratio (LCR) carve out from Statutory Liquidity Ratio (SLR).These additional measures will optically cushion earnings of banks -- especially PSBs, albeit bank-wise the impact is difficult to ascertain -- Edelweiss Securities said in a note.
Technical trigger: Thanks to morning gains, the Nifty is retesting its previous supply zone of 10,750-10,780 levels which, if breached, could accelerate the upside.
The ongoing buying momentum has been triggered as the index is believed to form a minor double bottom around its 50- and 100-day SMAs.
Valuations: Analysts noted that valuations for Indian equities have moderated from the recent highs.
The Sensex now trades at a 12-month forward P/E of 18.6 times, still at a 7 per cent premium to its long-period average of 17.4 times.
On the other hand, the Sensex price to book value at 2.7 times is marginally above its historical average P/B of 2.6 times.
Brokerages, including Motilal Securities, though see limited triggers for further re-rating unless accompanied by a pick-up in earnings.RBI's growth card and a neutral stance: According to analysts, chances of a status quo were greater than a rate hike and it was RBIs neutral stance that did the job.
Besides, Dalal Street appreciated the RBIs GDP growth target for FY19.
The neutral stance is not contradictory to the rate hike, but such a stance leaves all options open on the table for the MPC, Patel said in a media briefing.
The RBI retained GDP growth target for 2018-19 at 7.4 per cent the same as in April policy.
The economy is projected to expand in the range of 7.5-7.6 per cent in April-September and 7.3-7.4 per cent in October-March, with risks evenly balanced.