The Indian stock market has witnessed an impressive rally, with both the Sensex and Nifty indices reaching all-time highs on Thursday. The S&P BSE Sensex surged by 502.42 points, closing at a record level of 82,637.03, while the NSE Nifty50 climbed 87.45 points to set a new peak at 25,239.40, as of 9:20 AM. This significant upward movement reflects strong investor sentiment and confidence in the Indian economy.
The rally was significantly influenced by Moody's recent decision to upgrade India's GDP growth forecast for 2024 to 7.2%. This upward revision has bolstered market optimism and contributed to the record highs for the indices. In addition to this positive news, Mukesh Ambani’s strategic focus on artificial intelligence (AI) for Reliance Industries has provided an additional boost to the market. The company's AI-related initiatives are being closely watched and are expected to drive future growth.
Foreign institutional investors (FIIs) have played a crucial role in this rally, with strong buying activity contributing to the rise in market indices. Positive economic data from the United States, including encouraging GDP figures, has also helped to lift global market sentiment, benefiting Indian stocks as well.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted the significant aspect of the current market trend is its low volatility. "The market has been steadily climbing over the last 11 trading sessions, with the volatility index (VIX) falling to 13.79. This indicates a stable market environment," he said. He attributed this stability to the continued accumulation of quality large-cap stocks by domestic institutional investors (DIIs) and high-net-worth individuals (HNWIs). Meanwhile, FIIs have reduced their selling pressure and have shown increased buying interest on specific days, contributing to the market's resilience.
Vijayakumar also highlighted the potential for further market gains if there is substantial buying in the banking sector. However, he acknowledged that the banking sector faces challenges, including deposit struggles and concerns over pressure on profit margins, which have kept demand for banking stocks relatively muted despite their attractive valuations.
Overall, Vijayakumar observed that large-cap stocks are currently outperforming the broader market, a trend he views as positive. This strong performance of large-cap stocks, combined with reduced volatility and favorable economic forecasts, reflects a healthy and optimistic market environment. The steady rise in these stocks signals growing investor confidence and a robust economic outlook for India.
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