Icici Bank: Life-time highs: Why Sensex, Nifty are creating new records

NEW DELHI: Both Indian indices continued their upward journey on Monday, with the BSE Sensex closing above the historic 65,000 level for the first time ever.
The BSE Sensex, rallying for the fourth consecutive session, soared by 486.49 points or 0.75% to achieve a new all-time closing high of 65,205.05. Intraday, it reached a peak of 65,300.35, gaining 581.79 points or 0.89%.
Similarly, the NSE Nifty climbed 133.50 points or 0.70% to close at a record high of 19,322.55. It also hit an all-time intraday peak of 19,345.10, surging by 156.05 points or 0.81%.

Financial services stocks were the major gainers. Leading the charge, HDFC and HDFC Bank, prominent index heavyweights, witnessed gains of 1.75% and 1.08% respectively. This surge came after the approval of their $40 billion merger, with July 1 designated as the effective date.
Banks reached a new record high for the second consecutive session, while public sector banks experienced a notable rise of 3.61%, emerging as the top gainers among the sectors.
The market rally also extended to the broader segments, with small-cap stocks and mid-cap stocks settling at levels exceeding one year and achieving a new closing high, respectively.
Why stock markets are on a record-breaking spree
India’s stock market has been on a record-breaking streak in recent months, with both main indices- Sensex and Nifty- repeatedly hitting all-time highs. There are several reasons for this surge, including strong foreign investor inflows, revival of monsoon, and positive economic indicators such as strong GDP growth and low inflation.
Foreign investors bet big on India
One of the primary reasons for the recent surge is flow of foreign investors’ money into Indian stock markets. Foreign investors have been net buyers of Indian equities in recent months, pumping in billions of dollars into the market.
According to report in the Economic Times, foreign portfolio investors (FPIs) made a significant investment of ₹2.9 lakh crore in Indian equities on a gross basis in June. This amount sets a new monthly record, surpassing the previous high of ₹2.55 lakh crore invested in December 2020. This is a vote of confidence in the Indian economy and its long-term growth prospects.
“After key benchmark indices scaled fresh peaks last week, investors are hoping that FIIs would continue to increase exposure to Indian markets, given the strong growth trajectory. India’s record GST collections for the month of June further signifies the improving economic growth momentum,” Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, told PTI.
“Sentiments of investors are reinforced by positive domestic data and optimistic global cues. The global market was supported by resilient economic data, avoiding the possibility of a recession. India’s stock market trend was broad-based, owing to the outperformance from energy, financial, metal, and FMCG sectors,” said Vinod Nair, Head of Research at Geojit Financial Services.
Monsoon revival
The investor sentiment is also riding high due to possibility of India likely to experience another year of normal monsoon conditions. The southwest monsoon has already covered the entire country six days before the normal date, the India Meteorological Department (IMD) said on Sunday.
On Friday, the IMD had said the monsoon is expected to be normal in July across the country, barring parts of eastern Uttar Pradesh and south Bihar.
The monsoon holds significant importance as it serves as the lifeblood of India’s $3 trillion economy. A plentiful monsoon in July would alleviate concerns regarding summer crop yields and bring about higher incomes in the rural areas.
“The market’s record-breaking momentum continued as the robust June GST collections, and the monsoon covering most parts of the country in the last few days brought cheers to investors. The rally has been mostly due to strong foreign fund inflows and India performing well on most of the economic parameters could further strengthen the fund flows in the near term,” Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd, told PTI.
Cooling inflation: Inflation in India has been on the decline in recent months, giving the RBI room to pause its interest rate hike cycle. This is positive for businesses and consumers, as it will lead to lower borrowing costs and boost spending.
Strong corporate earnings: Corporate earnings in India have been growing steadily in recent quarters, and this trend is expected to continue in the coming quarters. This is being driven by strong demand, rising prices, and cost-cutting measures.
Positive global sentiment: Global stock markets have been on a bull run in recent months, and this has also boosted sentiment in the Indian market. This is being driven by factors such as strong economic growth in the US and China, and low interest rates in developed markets.
Here are some of the sectors that have contributed to the recent rise:
Auto sector: The auto sector has also been performing well, with companies like Tata Motors and Mahindra & Mahindra leading the way.
Financial sector: The financial sector has also been a key contributor to the rise in Indian equities. Non-Banking Financial Corporations (NBFCs) have emerged as the primary source of financing for a vast section of the population, including small and medium enterprises.
FMCG sector: The FMCG sector has also been performing well, with companies like Hindustan Unilever and Nestle India posting strong earnings.
(With inputs from agencies)

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