The domestic equity market continued its record-high run on Monday, extending gains for the fifth straight session; Know why?
Why Is the Market Rising Today? Indian shares hit fresh all-time highs on Monday, driven by financials and energy stocks as state election results boosted market momentum emerging from strong macroeconomic data and the ruling Bharatiya Janata Party’s (BJP) victory in key state elections.
The BSE Sensex soared 1000 points to new high of 68,486 and the NSE Nifty50 jumped 280 points to 20,550.
The market capitalisation of all listed companies on BSE surged by Rs 4.09 lakh crore to Rs 341.76 lakh crore.
From the Sensex pack, SBI, ICICI Bank, L&T, NTPC, and Airtel were the top gainers, rising over 2% each. M&M, HDFC Bank, Bajaj Finance, and Axis Bank also opened higher. Whereas only Nestle opened in the red.
At the same time, Adani stocks also rallied up to 14%. Adani Energy Solutions rose 14%, while Adani Power and Adani Green Energy surged over 12%. Adani Enterprises, Adani Total Gas, and Adani Wilmar advanced 6-8%.
Five State Assembly Election Result
Ruling Bharatiya Janata Party (BJP) secured key victories in three of the four state assembly elections, results showed over the weekend.
“The state election outcome will lead to greater confidence on continuity of BJP government at the centre which will drive markets higher,” Anjali Verma and Ravi Kumar, research analysts at PhillipCapital said in a note.
Strong FPI inflows
After 2 months of strong outflows foreign portfolio investors (FPIs) turned net buyers in the Indian stock market in November after three consecutive months of selling. A decline in the US treasury yields and softening of the dollar amid rising bets that the US Federal Reserve is done with raising key interest rates have triggered foreign fund inflows into emerging markets like India. FPI inflows into Indian equities during November stood at Rs 9,001 crore, compared to over Rs 39,000 crore worth of shares sold in September and October together. Meanwhile, just in the one session of December, on the 1st, FPI inflows in Indian equities stood at Rs 9,744 crore, as per NSDL data.
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Strong domestic macro trends
India’s Q2 GDP grew 7.6 percent, significantly exceeding expectations. A Mint poll of 18 economists had estimated the gross domestic product (GDP) growth to be about 6.8 per cent in the quarter.
Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities observed that the sharp upside rise seen in India’s second-quarter GDP figure underlines that the economic growth has come on the back of robust domestic demand.
“Growth based on domestic demand also points to the fact that India’s economy will continue to grow in the future despite the global economy slowing down. Hence, the Indian economy will also continue to attract foreign capital inflows and will carve out a different category among its emerging market (EM) peers,” said Sheth.
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US bond yield
Treasury yields hit multi-month lows last week after a US Federal Reserve official made fresh hints of interest rate cuts. The two-year yield hit its lowest since mid-July at 4.6% and the benchmark 10-year yield fell its lowest since September at 4.23%
Asian Markets
Asian shares were mixed in early trade on Monday. MSCI’s broadest index of Asia-Pacific shares outside Japan was still up 0.4%, led by gains in South Korea and Australia. Japan’s Nikkei dipped 0.4% as the yen extended recent gains.
Crude oil below $80
Oil futures fell on Monday amid geopolitical tension in the Middle East returned to focus, spurring concerns about supply from the region, but uncertainty over OPEC+ voluntary output cuts and global fuel demand growth clouded the sector’s outlook.
Brent crude futures fell 52 cents, or 0.5%, to $78.36 a barrel, while US West Texas Intermediate crude futures were at $73.62 a barrel, down 45 cents, or 0.6%.
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