Sensex and Nifty scale new peaks: What's driving this surge?
India's stock market benchmarks, the Sensex and the Nifty 50, have achieved new record highs today. The Sensex opened at 83,603.04 and climbed over a percent to reach an all-time high of 84,508.36. Similarly, the Nifty 50 began the day at 25,525.95 and ascended to its fresh peak of 25,804.40. This significant increase was also reflected in the BSE Midcap and Smallcap index which rose up to a percent as well.
Market capitalization of BSE-listed firms rises significantly
The total market capitalization of firms listed on BSE has seen a substantial increase, rising to ₹470 lakh crore from ₹466 lakh crore in the previous session. This surge has enriched investors by about ₹4 lakh crore in a single day. Manish Chowdhury from StoxBox attributed this positive shift to an improved sentiment in today's trading session following profit booking from higher levels yesterday, particularly in mid and small-cap stocks.
US market strength and RBI rate cut expectations influence stocks
Chowdhury noted that the overnight strength in US markets has positively impacted Indian stocks. He also mentioned higher expectations of a rate cut from the Reserve Bank of India (RBI) in future as another influencing factor. "The overall trend in markets remains positive, and the rate cut from the US Fed should further boost flows into emerging markets, including India," said Chowdhury.
Lower crude oil prices and good monsoons support capital markets
Chowdhury further highlighted that lower crude oil prices, good monsoons, and surplus liquidity with Domestic Institutional Investors (DIIs) should support capital markets in the near term. Narinder Wadhwa from SKI Capital suggested that the market could be pricing in better-than-expected quarterly results from key companies. He added that positive earnings guidance can boost market sentiment.
Five key factors driving the market's momentum
Market experts have identified five key factors that drive the market's momentum. These include positive global cues, the start of the rate-reduction cycle, easing concerns over a looming US recession, banking stocks leading gains, and technical factors. "Global markets, particularly in the US and Europe, may have shown strength, boosting investor sentiment," observed Wadhwa. The recent rate cut by the US Federal Reserve has also boosted investors' risk appetite.
Banking stocks and technical factors contribute to market momentum
Banking stocks, which hold significant weight in the benchmark indices, are experiencing healthy buying. This trend has supported the Sensex and the Nifty 50 with the Nifty Bank index rising by a percent to hit a fresh record high of 53,559.35. Stocks such as ICICI Bank and HDFC Bank rose up to 2%. Additionally, brokerage firm ICICI Direct noted that technical factors like higher high-lows after a breakout from consolidation are also contributing to market momentum.
