So far in December, the index has gained close to 6%, which is the best monthly gain since July 2022, when it gained nearly 9%.
The rally that took the index past the 21,000-point mark was a result of the strong show by 10 of its constituents, which clocked double-digit gains of up to 31%.
The top two stocks are obviously from the Gautam Adani stable – Adani Ports and Special Economic Zone and Adani Enterprises.
Adani Ports has gained a staggering 31% in December so far and also hit a lifetime high in trade on Thursday. Meanwhile, Adani Enterprises has added about 27% gains so far this
month and the second best-performing stock in the index.
The bull run in all Adani Group stocks this month was on the back of multiple positive triggers such as the Bharatiya Janata Party’s strong win in the state assembly elections. Further, the US International Development Finance Corporation reportedly said that the allegations by Hindenburg Research against the group were irrelevant. The US agency
had recently announced funding of $553 million in the group’s port business in Sri Lanka.
Next on the list are NTPC and Power Grid Corporation of India from the power sector. The power sector has been a big outperformer in the last few months, aided by the strong demand and capacity additions, besides a victory for the BJP in three key states in the Hindi hinterland.
NTPC shares have given over 13% returns so far in December, and those of Power Grid Corp have given 12% returns. Both the stocks scaled lifetime highs earlier this month. On a year-to-date basis, NTPC and Power Grid have rallied 78% and 46%, respectively.
The other public sector stock in the top 10 list was the State Bank of India, as the stock has given over 11% returns in the 11 sessions of December. Public sector banks have stolen
Dalal Street investors’ hearts as they consistently reported double-digit growth in loan growth, stable to higher margins, and strong asset quality.
Meanwhile, shrugging off concerns of weak earnings, stocks in the information technology sector rallied, particularly in the last two sessions, as investors drew comfort from the dovish comments of the US Federal Reserve. The central bank guided for cutting interest rates by 75 basis points in 2024.
Shares of LTIMindtree, HCLTech, and Tata Consultancy Services clocked double-digit gains of 10-11% so far in December. Infact, HCLTech also scaled its lifetime high on Friday.
The other stocks among the top 10 list are Larsen & Toubro and UltraTech Cement. These stocks gained 11% each so far in December. While L&T hit a record high on Friday, UltraTech did it earlier this week.
Will Momentum Sustain?
There is a slew of favorable events and macro indicators that drove the Santa rally on Dalal Street.
India has outperformed many of its peers, given the expectation of strong earnings momentum in the current quarter as well. Besides, corporate earnings downgrade risk has been reduced.
The biggest risk to the market of crude prices has eased as the chances of spreading the conflict in the Middle East appear less. This, according to Tata Mutual Fund, could sustain India’s valuation premium.
Most experts are not only optimistic about markets ending 2023 on a positive note but also entering 2024 on a fairly higher note.
“As we enter the new year, we should expect a very decisive bullish phase to set in…Factors that shape earnings, valuations, FIIs base of flows to Indian macro, external environment all coming together for predicting that Indian market could be in a very decisively positive phase,” said Amit Sachdeva, AVP, HSBC Securities.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
