Indian benchmark equity index S&P BSE Sensex touched the 80000 mark for the first time during the early trades of the day. As the market opened today, the inevitable rally of the domestic stocks pushed the 30-stock index of BSE to a fresh new high. Today Sensex opened at the 80013 mark while within the first two hours of the market session; it even went to a high of 80074 mark. Nifty 50 also crosses the 24300 mark while opening at 24291.75. During the first two hours of the market session, the Nifty 50 peaked at 24307.25. The market is filled with positive sentiment upon benchmark indices touching fresh all-time highs.
Factors driving the market
The rally that has been continuing in the domestic market is largely driven by heavyweight stocks, especially from the banking sector. HDFC Bank has been leading the sector as well as adding to the surge in the benchmark indices. This bank stock has gained around 3.66% during the early trades of the day, and itself touched fresh all-time highs of ₹ 1794 per share. This bank stock itself added around 70 points to the Nifty 50 or 51% of the total rise of the index during the market opening.
The surge in the share price of HDFC Bank can be attributed to the declining shareholding of foreign institutional investors (FII). This can also increase the inflow from MSCI as anticipated by the experts. The current weightage of HDFC Bank in the msci em index is around 3.8%, which can further increase if the FII shareholding drops below 55%. The weightage can increase from 3.8% to even 7.5% with an inflow of around $3.2 billion to even a whopping $4 billion. Apart from HDFC Bank, other bank stocks that are driving the overall market up today include ICICI Bank, Axis Bank, and Kotak Bank. This rally amongst the banking stocks, also took the nifty bank index to a fresh all-time high today that is above the 53201 level.
FMCG stocks also added fuel to today’s market rally. Significant gains from Britannia Industries, Mrs. Bectors Food securities, Nestle India, Zydus Wellness, Tata Consumers products, and Dabur India also added to the overall surge in the benchmark equity indices. These FMCG stocks gained around 2% during the early trades of the day.
The rally in the FMCG sector is driven by the revival of monsoon as July arrived, and people are expecting new initiatives for boosting the rural economy in the upcoming budget.
Apart from the sectoral rally, the significant rise in GST collection for the month of June 2024 also added to the surge in the stock market. The Manufacturing PMI index on the other hand also bounced back to 58.3 in June indicating growth in the manufacturing sector. Another reason for the market rally is investor’s expectation of healthy Q1 results, which can increase their earnings. Finally, positive global cues also add to the domestic market and uplift the domestic market sentiments.
Wrapping up
Multiple factors are playing behind the unparalleled rally that is going on in the domestic stock market. Within a week, there have been two instances of Sensex all-time high record and nifty 50 all-time high record. This is quite a rare market scenario however, investors must analyze all the factors before making investment decisions.
Source: https://www.moneycontrol.com/ https://www.livemint.com/
______________________________________________________________________________________
Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.