Benchmark stock market indices hit record highs at the opening bell on Monday, continuing their positive momentum from the previous trading session. The Sensex soared to an all-time high of 81,749.34 in early trade, while the NSE Nifty50 came within touching distance of the 25,000 mark. Both indices are trading near record-high levels as investors appear to have moved past concerns over the capital gains announcement in Budget 2024.
A multitude of factors have contributed to the rebound of Dalal Street today and in the previous session. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, shared some valuable insights to explain the current market momentum. He noted that the undercurrent of the bull market has turned stronger due to positive cues.
Vijayakumar highlighted the expectation of a soft landing for the US economy and an anticipated Fed rate cut in September, which remain intact. This expectation is providing global support to the bull market. Additionally, the decline in the US 10-year bond yield to 4.17% and the drop in Brent crude prices to $81.2 are other supporting factors that are bolstering investor confidence and contributing to the market's upward trajectory.
Both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) turned buyers last Friday, resulting in a total buying of Rs 5,320 crores, which sharply pushed the market up. DIIs, which were previously sitting on cash waiting for clarity on tax proposals in the Budget, have started deploying funds, particularly in quality large-cap stocks. This strategic investment has been instrumental in the sharp rally observed in the Nifty.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, emphasized that the bullish sentiment remains strong, bolstered by positive US Personal Consumption Expenditures (PCE) inflation data ahead of the Federal Reserve meeting, where a September rate cut seems imminent. Key events this week include the Federal Open Market Committee (FOMC) meeting conclusion on July 31st, Friday's US Non-Farm Payrolls (NFP) data, and Q1 results from major companies. These events are expected to further influence market sentiment and guide investment strategies.
In the current scenario, the market is likely to ignore valuation concerns and continue its upward trajectory. Investors are buoyed by the robust performance of key sectors, positive global cues, and strong domestic institutional buying. The positive momentum is expected to sustain, with markets closely monitoring upcoming economic data and corporate earnings. The optimism is also fueled by expectations that global economic conditions will remain favorable, providing a conducive environment for continued growth.
As markets move forward, the focus will be on maintaining this momentum while navigating any potential challenges arising from global economic developments and domestic policy changes. Investors will be closely watching for any signals that might indicate a shift in economic policy or market conditions. The record highs in the Sensex and Nifty50 reflect strong investor confidence driven by favorable economic indicators, strategic buying by institutional investors, and optimism about future economic policies.
The strong start to the week and the record highs achieved by the Sensex and Nifty50 underscore the resilience and potential of the Indian stock market. This performance not only reflects current investor sentiment but also sets the stage for future growth as the market continues to respond to both domestic and global economic developments. Investors are likely to remain engaged and optimistic as they navigate the evolving market landscape, capitalizing on opportunities and managing risks effectively.
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