Back To The ‘All is Well’ Feeling

Domestic indices hit record highs on the back of robust performance in real estate, power, metals and automotive sectors

At the end of a volatile fortnight, domestic indices have finally reached new all-time highs on the bourses, reflecting global resilience, which is exemplified by the Nasdaq Composite index and Japan’s Nikkei soaring to record levels. The benchmark indices, BSE Sensex and Nifty 50, witnessed gains of 1.9 per cent and 1.5 per cent, respectively, driven by heightened optimism in the market, thereby outperforming the broader indices. After encountering severe selling pressure in the last fortnight, the BSE Small-Cap index managed to recoup some of its earlier losses, gaining 0.42 per cent.

Conversely, the BSE Mid-Cap index saw a modest gain of 0.08 per cent. On the sectoral front, real estate has distinguished itself as the top performer, as evidenced by the BSE Realty index posting gains of around 5 per cent during the fortnight. The remarkable rally of 125 per cent over the past year has been fuelled by governmental emphasis and initiatives aimed at bolstering the sector, further complemented by robust demand as depicted in the presales figures. The upcoming summer season brings the potential for strong demand for electricity, fuelling optimism within the power sector.

Increased capital expenditure and the companies’ robust order books are attracting investors’ positive sentiment, evidenced in notable buying in power sector stocks. Investors displayed particular interest in the metal, automotive and banking sectors, as evidenced by their respective sectoral indices gaining over 2 per cent each. Oil and gas stocks, which experienced significant rallies in the past fortnight, appeared to encounter some profit booking, while the IT sector stocks unexpectedly witnessed losses despite global rallies in the industry driven by advancements in AI technology.

An intriguing development has unfolded with the USD 8.5 billion merger between Reliance Industries’ arm Viacom 18 and The Walt Disney Company’s Star India. This merger is poised to significantly reshape the media and entertainment industry, creating the biggest media entity in the country. As per the Reserve Bank of India’s monthly bulletin, the growth momentum witnessed in the Indian economy during the first half of the current financial year is expected to continue into the second half. Anticipations of a new wave of capital expenditure by the corporate sector are poised to propel the upcoming phase of growth.

Based on available data, India’s GDP growth expanded by 8.4 per cent during the October-December quarter of the current financial year, solidifying its status as the fastest-growing major economy worldwide. In the past two weeks, foreign institutional investors (FIIs) turned into net sellers, while domestic institutional investors (DIIs) switched to being net buyers. FIIs recorded a modest net outflow of `1,998 crore, contrasting with DIIs, who bolstered the market with a substantial net inflow of `11,756 crore during the same period.