FIIs Push the Market to New Highs

The market enjoyed a six-session winning streak, fuelled by FII and DII interest, as FIIs injected ₹14,000 crore in a single day—the highest single-day inflow in three years.

The pre-festive trading sessions brought an air of optimism, as Indian benchmarks experienced another extended winning streak over the last fortnight, with six consecutive sessions of gains. As a result, the BSE Sensex and Nifty 50 surged to new all-time highs, delivering impressive returns of 3.23 per cent and 3.24 per cent, respectively, over the fortnight.

A key catalyst behind the rally was substantial foreign institutional investor (FII) buying, with FIIs infusing a remarkable ₹14,000 crore into the Indian markets in just one day, marking the highest single-day inflow in the last three years. Both FIIs and domestic institutional investors (DIIs) acted as major market drivers, contributing significant sums of ₹7,585 crore and ₹15,328 crore, respectively, during the fortnight. In contrast, the broader indices displayed limited growth compared to the main indices.

The BSE Mid-Cap index gained 0.50 per cent, while the BSE Small-Cap index registered a marginal decline of 0.06 per cent. Investor sentiment varied across the sectors, with defensive players like healthcare and FMCG showing a moderate performance. In contrast, sectors such as metals, automotive, realty and power drew significant investor interest, surging with robust gains of 6-8 per cent. Real estate, automotive and power stocks are all experiencing significant surges, driven by expectations of seasonal uptick in activity during the October-December period.

In the real estate sector, favourable market conditions and festive sentiments boost consumer demand for residential and commercial properties, encouraging home buying. Developers are capitalising on this momentum by launching new projects and offering attractive deals, which enhance investor confidence. Similarly, automotive stocks are benefiting from heightened consumer sentiment surrounding the festive season, particularly during Navratri and Dussehra, when big-ticket purchases like vehicles are in demand.

Automakers are strategically releasing new models and providing special discounts and financing options, further stimulating sales during this crucial time. In the power sector, stocks are rallying due to the expected rise in industrial and commercial activity, which leads to heightened electricity demand. The festive season, especially Diwali, amplifies consumption as households and businesses use more energy for decorations and celebrations, prompting power companies to boost generation capacity to ensure a reliable supply.

In other developments, India’s retail inflation saw a slight increase to 3.65 per cent year-on-year in August, marking the second-lowest rate in the past five years, according to recently released data. Meanwhile, the Index of Industrial Production (IIP) recorded a growth rate of 4.8 per cent in July 2024, a modest rise from the 4.7 per cent reported in June 2024.