The Gold price in the Indian markets touched the historical high point of `51,500, price of 10 grams of gold in the third week of July 2020. The equity market has joined its own kind of gold hunt.

After suffering severe beatings in February and March, the stock market has been steadily rising since the declaration of COVID-19 as a pandemic. The market rise at this time when the economy is in the doldrums is turning many eyebrows.

Now the question that has arisen is whether the Sensex will breach the 50,000 mark from the July 23 level of 38,140 and climb far beyond the previous peak level at 41,952 reached on January 15 this year.

The upward movement rose 9.81 per cent adding 3,409 points to the 30-stock Sensex after continuously rising day after day though six weeks from June 12. During that time, the 50-stock Nifty piled 971 points to reach the 11,215 mark, a growth of 9.48 per cent, by July 23.

This is a dramatic recovery if you consider that the market sunk to its worst level of 25,639 Sensex points and 7,610 points of Nifty points on March 23—one day before Prime Minister Narendra Modi announced the country-wide lockdown. Seen from this bottom level in March, the Sensex has done a pole jump of 49 per cent adding 25,639 points while the Nifty leapt up 47.37 per cent.

Umesh Mehta, Head of Research, Samco Securities said, “There is no doubt that what we are currently witnessing is substantial buying interest in the handful of stocks having greater weightage in the benchmark indices are adding more points to the indices. We are yet to witness a broader market rally, which will take some more time. The Sensex will reach the 50K level sooner maybe before the FY21 ends but not in a linear manner. Before that, my feeling is that it should encounter substantial correction and then it should start its journey towards 50K”.

This means, when Sensex reaches 50K level, Nifty will be trading around 16,500 level during the same time, he added.

This is the repeat of what we’ve seen during 2002-2008 bull market run when we saw all asset classes –Equity, Bullion and Real Estate—participating in the rally. The real estate is missing this time, said Bhavesh D Damania, founder and Chief Care Taker, Wealthcare Investments.

“The rally in equities is purely the function of liquidity injected in the market while the gold demand is rising because of its safe-heaven characteristic as major institutional buying is being witnessed and both asset class will continue to witness uptrend for quite a long period of time”, said a top executive with a foreign investment bank on the condition of anonymity.