The last week of June has been a week of fresh all-time highs for both the mainstream equity indices – Nifty 50 and Sensex. While the Nifty 50 crossed its crucial 24000 mark yesterday 27 June 2024, BSE Sensex almost nears 80000 mark. Apart from the positive market sentiment, there are multiple factors, which are playing underneath to drive the market upward. Let’s have a closer look at these factors to understand the reasons behind the market trend.
Factors driving the stock market
The stock market in India has been gaining for the past five trading sessions straight, which took the Nifty 50 record high of over 24000 points. The major factors driving the market presently include –
- India’s inclusion in the JP Morgan Bond Index: While it was decided earlier that India will join the JP Morgan Bond Index, however, today is the day when it will be actualized. This inclusion can attract around $25 to $30 billion of funds into the country in the coming 10-month period. India is the 25th nation to join this Index, which was launched back in June 2005. The weightage of domestic bonds in the index is around 10% and it will increase by 1% every month starting in June.
- US Dollar Movement: Stock markets are highly affected by the movement and value of the US Dollar. The recent downfall in the US Dollar Index by 0.15% has been another reason for the boost in the domestic market, which also added to the nifty 50-all-time high record.
- Foreign Investments Data: The domestic stock market also looks forward to FIIs and as the FIIs have been buying Indian stocks this week, the market is having a positive sentiment. FIIs bought around ₹ 7658.77 crores of equity shares on 27 June 2024 while the DII’s investment into the market was around ₹ 3605.93 crores yesterday. This added to Sensex’s all-time high record too.
- Global Cues: The markets in the US have been a bit slow this week as investors are awaiting fresh inflation data. Though most of the the Asian markets have been inching higher the overall global cues were mixed this week, however, that couldn’t suppress the domestic market. Defying all the negative global cues, the Indian stock market touched new highs, which can be attributed mainly to the rising domestic investments.
- Crude Prices: Stock market movement is correlated with crude oil prices. The WTI crude prices went up yesterday by around 0.23%, which has been another reason for the equity benchmark indices like nifty 50, and Sensex to shoot up. However, the Brent crude prices declined by 1.03% today morning.
- Stable policies: Another reason, that has been driving the market up since the election result, has been the stability of the government and its policies. For business to thrive continuity in government policies, and economic policies is crucial and NDA again coming into power but this time with a strong opposition has been playing well for the domestic stock market.
- Healthy monsoon: Finally, a healthy monsoon forecast is also pushing the market sentiments upward. Inflation can further ease with a good monsoon, which can lead to rate cuts by the central bank.
Top gaining Sectors
The rally to hit fresh highs this week was mainly driven by the banking sector. Be it the large private sector banks or the PSU banks, both sectors gained, which boosted the overall equity market. Apart from the banking sector, the IT sector and the FMCG sector also added to the fresh gains of the market, also to the nifty 50 top gainers.
Wrapping up
Indian stock market has been moving up the ladder defying all odds and the current nifty 50 and fresh Sensex all-time high records are proof of the incredible market dynamics. However, it will be interesting to see how to upcoming budget shapes the market in the coming month.
Source: https://www.financialexpress.com
______________________________________________________________________________________
Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.