The benchmark index Sensex on Thursday breached the 36000-mark for the first time since March 11, tracking global markets which firmed up following encouraging Covid-19 vaccine trials. However, the gain in stock prices has raised questions whether it is justified by the fundamentals and about markets disconnected from the harsh realities of the economy ravaged by the pandemic.

Global stocks rallied on Thursday on news that a Covid-19 vaccine candidate, tested by Pfizer, and German biotech firm BioNTech SE, is safe, well-tolerated, and can generate antibodies in people. Expectations of a sharp rebound in US employment numbers also lifted sentiments.

Back home, factors such as a pick-up in auto sales and fresh data from the CMIE showing falling unemployment rates also supported the rally. However, this is a narrative put up by the government and some brokerages which masks the ground realities.

The 30-share Sensex, which opened in the green at 35604.00, breached the 36000-level in post-noon trades to hit a high of 36014.92, a rise of over 600 points. It later gave up some of the gains and settled at 429.25 points, or 1.21 per cent, higher at 35843.70.

The NSE Nifty surged 121.65 points, or 1.17 per cent, to close at 10551.70.

The rupee also surged 56 paise to close at a more than three-month high of 75.04 against the US currency on Thursday, tracking the weakness in the greenback and gains in domestic equities.

“Despite the ongoing rise in global virus cases, Asian equity markets saw their biggest daily rise in over two weeks overnight. World stocks rose for the fourth straight day as encouraging coronavirus vaccine trials kept investors’ spirits up ahead of what was expected to be a record rebound in US jobs figures later,” Deepak Jasani, head of retail research at HDFC Securities, said.

Arun Kejriwal, director of investment advisory firm KRIS, feels the current valuations are not justified by fundamentals and retail investors should exercise caution. “For the first quarter this year, barring some sectors like information technology, pharma, telecom and food, results are going to be bad for others. The current market levels do not justify the present economy,” he said.