Sensex scales 44,000 high on vaccine hopes

Indian equities rocketed to a new high on Tuesday as news of another promising Covid-19 vaccine supported hopes of a quicker economic recovery from the turmoil caused by the pandemic.

For the first-time ever, the BSE Sensex breached the 44,000-level in early trade before hitting an intraday high of 44,161.16. The Sensex closed at 43,952.71, up 314.73 points or 0.72%. The Nifty closed at 12,874.20, up 93.95 points or 0.74%. Investor sentiment was boosted after Moderna Inc. said its experimental Covid-19 vaccine was 94.5% effective in preventing infection. Moderna is the second drug maker after Pfizer Inc. to announce promising trial data in the development of a vaccine for the viral infection.

“The latest news on vaccine from Moderna is a major positive for economy and markets. Moderna vaccine appears better than that of Pfizer in terms of effectiveness and temperature requirements. (It) looks like the threat from covid will be over by mid-2021,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

Gaining more than 10% in November, India’s benchmark indices have outperformed the MSCI Emerging Markets index (up 9%). The MSCI World has risen nearly 12% this month. In dollar terms, both Sensex and Nifty have surged more than 72% while MSCI EM and MSCI World are up around 59-60% from the March lows when the outbreak of Covid-19 rattled global markets.

Investors were also enthused by upgrades of Indian equities ratings by global brokerage houses such as Morgan Stanley, Goldman Sachs and Nomura. The actions follow a likely peaking of Covid-19 infections in most parts of the country, recovery in high-frequency growth indicators and resumption in activity by India Inc. after the lockdown.

Some investors are however concerned that the rapid rise of Indian markets may be lagging fundamental support as valuations seem to be overheated.

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