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The BSE’s Sensex scaled a new high on Monday, with the benchmark index crossing the 70,000-mark for the first time amid investors’ optimism about the economy’s resilience and as foreign portfolio investors (FPIs) continue to pour money into the domestic equities.
After opening at 69,825.6, the Sensex touched a record high to 70,048.9 during the early morning trades. The NSE’s Nifty 50 which opened at 20,965.3, surged to all-time high of 21,026.1.
The rally in the domestic market is also driven by the last week’s upward revision of the GDP forecast to 7 per cent for FY’24 from 6.5 per cent by the Reserve Bank of India (RBI), expectation of political stability after the 2024 Lok Sabha election following the Bharatiya Janata Party (BJP) victories in three out of five recently conducted assembly polls, fall in crude oil prices and improvement in corporate earnings.
So far in December, the Sensex and the Nifty 50 have risen by around 3.5 per cent.
“Global and domestic cues favour continuation of the ongoing rally in the market despite high valuations. FIIs turning buyers, strong DII inflows, exuberant retail investors and a thriving IPO market supported by strong economic fundamentals can sustain the rally in the short run ignoring the high valuations,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The overarching message from the RBI on Wednesday was that 7 per cent GDP growth for FY’24 is a conservative estimate. This is an indication of the growth momentum in the economy, he said.
“The fundamentals of the Indian economy remain strong with banks and corporates showing healthier balance sheets; fiscal consolidation on course; external balance remaining eminently manageable; and forex reserves providing cushion against external shocks. These factors, combined with consumer and business optimism, create congenial conditions for sustained growth of the Indian economy,” RBI Governor Shaktikanta Das said after announcing the monetary policy, last week.
The RBI left the repo rate unchanged for the fifth time in a row at 6.5 per cent on concerns over rise in inflation due to uncertain food prices.
A significant trend in the market is the outperformance of the Bank Nifty over the Nifty. Last week, while the Nifty appreciated by 3.5 per cent, Bank Nifty shot up by 5.5 per cent.
On Monday, the Bank Nifty opened at 47,233.3 and touched a high of 47,588. It closed at 47,262 on Friday.
“This outperformance is likely to continue, given the fair valuations of banking stocks, particularly the leading names,” Vijayakumar said.
The market capitalisation of the BSE-listed companies touched Rs 350.94 lakh crore and of the NSE firms reached Rs 346.17 lakh crore.
In the last six trading sessions, FPIs have bought Rs 26,505 crore of local shares compared to Rs 9,001 crore purchased in November.
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