Markets at new high, Sensex hits 48,000 for first time ever

The markets were propelled by positive macro indicators and vaccine progress in India

The markets touched new highs in early trade on Monday, propelled by positive macro indicators and vaccine progress in India. The Sensex hit 48,000-mark for first time ever. At 9.48 am, the BSE Sensex was at 48,093.77, up 224.79 points or 0.47%. The Nifty was at 14,096.20, up 77.70 points or 0.55%.

"Positive economic data such as all-time record goods and services tax (GST) collections and impressive auto numbers, particularly in crucial segments such as heavy commercial vehicles (HCVs) and medium commercial vehicles (MCVs) in December augur well for the markets. Low-interest rate regime in the developed world and the declining dollar are positives for capital inflows into emerging markets such as India. The risk is something triggering capital outflows which can cause a sharp correction in markets," said V.K. Vijayakumar, chief investment strategist, Geojit Financial Services.

Record gross goods and services taxes (GST) collections in December, suggest continued recovery in economic activity and the gradual return to normalcy. Gross GST collections touched Rs1.15 trillion last month, the highest-ever since the implementation of the new tax regime, according to the Union finance ministry.

In December, passenger and commercial vehicles wholesales were above estimates, whereas two-wheeler and tractor wholesales were in line.

“With pent-up demand largely fulfilled, it would be critical for demand to sustain in 4QFY21 and beyond, considering the expected price hikes as well as opening up of public transport in many parts of the globe. Current valuations suggest recovery is likely to sustain, leaving limited safety margin for any negative surprises," said Motilal Oswal Financial Services Ltd.

Shares in other Asia Pacific region were mostly higher on Monday. Markets in Japan were weak on concerns that the government was considering a state of emergency for capital Tokyo and three surrounding prefectures to contain spread of covid-19.

Meanwhile, minutes of the Federal Reserve's December meeting due on Wednesday is likely to offer more detail on discussions about making their forward policy guidance more explicit and the chance of a further increase in asset buying this year.

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