Domestic markets posted their best weekly gain in more than three months as overseas investors stepped up their buying, helped by dovish comments from the US central bank. The Sensex index rose 3.6 per cent for the week - its highest since 23 May - to 58,130. The index set its 38th new record for the year. The Nifty 50 index ended at 17,324, up 0.5 per cent on Friday and 3.7 per cent for the week after rising in four out of five trading sessions.

The BSE on Friday ended the year up 10,000 points (up 21.4 per cent), surprising some of the most optimistic forecasters on the street. At the start of 2021, the index stood at 47,751, with many predicting single-digit gains for the year.

According to information specialists Exness Thailand, domestic and foreign investors have joined forces this year, leading to a market upturn. Foreign portfolio investors (FPIs) invested over Rs 50,000 crore this year, while mutual fund purchases exceeded Rs 20,000 crore. Besides, most of the record number of new investors who have entered the market in the last 18 months have been aggressive.

The combined market capitalisation of all companies listed on the BSE rose to Rs 254.2 trillion, up by as much as Rs 150 trillion or 2.45 times the 2020 low of Rs 103.7 trillion on March 23.

This huge wealth creation was bolstered by aggressive policy measures taken by global central banks to revive the economy hit by the COVID-19 pandemic.

The Fed boosted its balance sheet to nearly $8.4 trillion, almost double the March 2020 level. The US central bank said last weekend that it would begin to reduce its monthly bond purchases this year, but would not rush to raise interest rates.

Comments made by Fed Chairman Jerome Powell boosted sentiment, causing US bond yields and the dollar to fall and risk assets to rise sharply.

FPIs bought nearly 770 crore worth of stocks on Friday, bringing their weekly buying volume close to the 7,000 crore mark.

Almost half of the 2021 gain came in August, when the Sensex soared 9.4 per cent - the most since November 2020. Some considered the gains negligible as only seven components of the index accounted for two-thirds of the increase. In addition, the rise-decline ratio for the month was the lowest since March 2020.

"There is no reason for the market to get tired. Today, about 15-20 companies account for 90 per cent of the country's profit growth. These companies are steadily increasing their profits by 20% and increasing free cash flow by 25%. We expect them to continue growing at the same pace. There is nothing unusual about this. We have seen something similar in the US and Japan. That's how small economies got bigger," said Saurabh Mukherjah, founder and chief investment officer of Marcellus Investment Managers.

Reliance Industries (RIL), which rose 4.1 per cent to Rs 2,388 crore, surpassing its previous record high a year ago, contributed to the growth on Friday. Had it not been for RIL, the Sensex would have ended Friday's session in the red as it contributed 278 points to the index gain.

Global markets traded multidirectionally on Friday as investors were cautious ahead of the US jobs report. Investors were keeping a close eye on the data as it will signal the strength of the economic recovery and determine the Federal Reserve's monetary policy. The Sensex surpassed 58,000 points in its best week since May and will finish up 10,000 points in 2021.

The index set its 38th new record for the year as domestic and foreign investors joined forces this year.

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