Nifty50 witnessing fastest rally since FY10

As the Indian equity indices continue to hit new highs, Nifty50 has witnessed its fastest rally since the financial year 2009-10.

The Nifty50 on the National Stock Exchange (NSE) has gained 86 per cent in the current financial year, showed a report by ICICI Securities.

On Friday, it hit a fresh all time high of 14,289.30 points.

“On a rolling 9-month basis, the NIFTY50 index (+86 per cent) is close to exhibiting the fastest rally since FY10 when it gained 103 per cent in a similar timeframe,” it said.

The report noted that unlike the FY10 rally where domestic institutional investments (DII) also contributed to the positive flows along with the high level of foreign portfolio investments (FPI) inflows, the current rally has seen consistently opposite flows from FPIs and DIIs.

Nevertheless, mutual funds did contribute to outflows during FY10 and, overall, the DIIs contributed positively, it added.

Going ahead, faster than expected pickup in aggregate demand may make it a consensus buy for both FPIs and DIIs, thereby further fuelling the bull market rally, the report said.

However, it noted that currently, the drivers of near-term aggregate demand remain weak in the form of household spending driven by weak consumer sentiment, fiscal constraints on government spending, and corporates cutting back on capital expenditure (capex) and operational expenditure (opex).

In December 2020, outperformance in stock prices was observed in high beta stocks including realty, PSU banks, metal, and consumer durables and sectors such as IT, telecom, and pharma.