Indices Surge with Sectoral Momentum

The indices received a substantial boost thanks to a robust upswing in the metals, real estate, and power sectors, marking a resurgence following several lacklustre sessions subsequent to a previous rally. 

In the past fortnight, foreign institutional investors persisted with their selling activity, while robust investments from domestic institutional investors provided substantial support to the market. During this period, FIIs recorded an outflow of ₹9,206.87 crore, whereas DIIs contributed significantly with an inflow of ₹18,066.06 crore. Indian benchmark indices experienced a volatile period marked by fluctuating gains and losses, except for the last trading session, which emerged as a pivotal turning point, offering much-needed support and propelling the indices significantly higher. Consequently, the BSE Sensex and Nifty50 both recorded gains of 0.68 per cent and 0.65 per cent, respectively. 
 

Continuing the trend, the broader indices proved highly appealing to investors, with the BSE Midcap index gaining 3.87 per cent while the BSE Smallcap index outperformed the main indices, soaring more than 6 per cent. BSE Metals, one of the sectoral indices that has suffered the most year-to-date, has now turned the tables, soaring more than 7 per cent in the past two weeks and reaching a 52-week high on the bourses. Metal stocks rose sharply after China, the world’s largest producer and consumer of metals, decided to lower mortgage interest rates for first-time homebuyers to boost its real estate sector.
 

While the domestic property market’s robust performance has been bolstered by the anticipation of a resilient economy and persistent housing demand, real estate stocks have climbed significantly, driven by a wave of global optimism surrounding the sector. Amidst fluctuating temperatures in India, which drove electricity demand to its peak in August, power sector stocks surged and generated electrifying returns over the last fortnight. BSE Power emerged as one of the best-performing indices, with Bharat Heavy Electricals Ltd, one of its constituents, experiencing a remarkable 39 per cent rally over the fortnight. 

As the prices of oilseeds and pulses show no signs of decreasing, consumers are increasingly favouring low-priced product packs over high-value FMCG items. The continuous upswing in retail inflation is exacerbating the already tense situation within the FMCG industry, leading to a decline in FMCG stocks. The government’s reduction of ₹200 in domestic LPG gas cylinder prices prompted public sector oil marketing companies (OMCs) to lower commercial LPG gas cylinder prices, subsequently causing significant declines in OMC stocks. During the past two weeks, Adani Group stocks witnessed substantial losses following fresh allegations raised by the Organized Crime and Corruption Reporting Project (OCCRP). One of the buzzing stocks on the bourses, shares of Jio Financial Services Ltd, managed to stage a remarkable recovery after hitting consecutive lower circuits in initial trading sessions. In other developments, India’s robust expansion in its services sector has propelled the country’s combined exports and imports of goods and services to reach the USD 800 billion milestone in the initial half of 2023. According to the Ministry of Statistics and Programme Implementation, India’s Gross Domestic Product (GDP) growth rate surged to 7.8 per cent during the period from April to June, marking its highest growth rate in four consecutive quarters.