Indian Indices Stay Buoyant

Following a remarkable 13-day winning streak, Indian benchmarks faced significant volatility in the last fortnight, reflecting diverse investor sentiment. After a notable pullback from their record highs, the indices received a fresh boost during the closing sessions, rallying nearly 2 per cent in a single day to hit new all-time highs.

The Nifty VIX, an indicator of the market’s expected volatility, tumbled by more than 17 per cent over the past week. Both FIIs and DIIs have emerged as key boosters for the market, injecting substantial amounts of ₹17,630 crore and ₹9,886 crore, respectively, during the fortnight. The bullish sentiment was fuelled by strong buying, particularly in Large-Cap stocks, with metals emerging as Top Gainers.

This came on the back of news that China plans to cut rates by 50 bps on USD 5 trillion worth of mortgages as early as this month to stimulate consumption. Additionally, the European Central Bank further reduced interest rates as inflation eased and economic growth in the eurozone weakened. Following this major boost, the BSE Sensex and Nifty 50 closed in positive territory, recording gains of 0.64 per cent and 0.48 per cent, respectively.

The BSE Mid-Cap index saw modest growth, while the BSE Small-Cap index outperformed the major indices with an impressive 2 per cent gain. Investor sentiment was mixed across various sectors. Defensive sectors such as fast-moving consumer goods (FMCG) and healthcare emerged as the top gainers, while the BSE Oil and Gas index, a key sectoral indicator, plunged by around 7 per cent, facing heavy selling pressure.

The global crude oil prices continued their downward trend, reaching nearly three-year lows due to weakening demand and OPEC’s shrinking market share, largely attributed to a significant drop in Chinese demand. The shares of oil marketing companies (OMCs) took the hardest hit, despite the general view that falling oil prices benefit India, one of the largest importers of the commodity. However, this situation can become a double-edged sword, as declining prices can erode the profit margins of the OMCs.

The Indian benchmarks surged to new record highs, driven by strong FII buying and fuelled by optimism over interest rate cuts from major global economies.

Investor sentiment in the primary markets remained robust, as evidenced by the strong subscription levels in both mainboard and SME IPOs. Gala Precision Engineering Ltd. and Shree Tirupati Balaji Agro Trading Company Ltd. topped the charts in terms of demand. The highly anticipated Bajaj Housing Finance Ltd. IPO also witnessed substantial oversubscription, surging to a 135 per cent premium above its issue price of ₹70 per share. It will be interesting to observe whether the markets maintain their upward trajectory or if investors shift towards profit booking. Stay tuned for further developments!