Nifty, Sensex hit all-time highs: What's driving the rally
Indian benchmark indices Nifty and Sensex reached record highs on Monday morning, marking gains for the second consecutive session. The surge was primarily fueled by a sharp rally in banks and robust market liquidity. At around 9:20am, the Sensex rose by 0.44% to 81,688 while the Nifty increased by 0.43% to 24,942. The market breadth favored advances with approximately 2,328 shares rising, 532 declining and 135 remaining unchanged.
Retail participation, FIIs drive positive market mood
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, attributed the upbeat market sentiment to strong retail participation and foreign institutional investors (FIIs) turning net buyers on Friday. Despite the capital gains hike announced in Budget 2024, investors are entering the market at every dip. Domestic institutional investors (DIIs) bought shares worth ₹18,856 crore and sold shares worth ₹16,082 crore while FIIs purchased shares amounting to ₹18,201 crore and offloaded equities worth ₹15,655 crore during the trading session.
ICICI Bank's robust Q1 earnings drive market optimism
ICICI Bank was a key player in the session following strong Q1 earnings reported over the weekend. Brokerages largely remain bullish due to the bank's superior asset quality, loan-to-deposit ratio (LDR), and margins compared to peer lenders. Analysts at Morgan Stanley expect ICICI Bank's stock to perform well post-Q1FY25 due to its return on assets (RoA) being above normalized levels with room for potential margin normalization.
India VIX rises, broader markets outperform benchmarks
The India VIX, also known as the fear gauge, rose by 4.5% to reach 12.7 today. Meanwhile, broader markets outperformed benchmarks with BSE Midcap and BSE Smallcap indices climbing up to 0.6% and 1.3%, respectively. Bathini noted that mid and smallcap companies are showing their earning visibility and are fairly valued on a medium to longer-term basis.
Sectoral indices rise, FMCG index declines
Among sectoral indices, Nifty Bank rose by nearly a percent, supported by gains in ICICI, SBI, and IndusInd Bank. Energy and IT indexes followed suit, rising 0.9 and 0.8% each. The FMCG index was the only sector to fall, declining by 0.2% due to Tata Consumer Products which is set to announce its earnings on July 30.
