Investors Take The Markets To A Higher Level

Even though the domestic markets witnessed a sharp decline on budget day due to significant changes in the capital gains tax framework, indices swiftly recovered, with the Nifty 50 even crossing the 25,000 level. A roller-coaster ride defined the past two weeks for benchmark indices, which, after having scaled new peaks, took a precipitous dive in tandem with global weakness. US’ recession fears heightened after the release of unemployment data, while a bloodbath in major Asian markets following Japan’s interest rate hike, rising geopolitical tensions in the Middle East, and less-than-expected Q1 results were the primary factors behind the weakness.

As a result, the BSE Sensex and Nifty 50 managed to post modest gains of 0.47 per cent and 0.76 per cent, respectively. In contrast, broader indices outperformed the main indices by a significant margin. The BSE Mid-Cap index surged 3 per cent, while the BSE Small-Cap index shone with over 4 per cent gains during the fortnight period. Overall, investor optimism was impressive across most sectoral indices, which saw notable gains, except for real estate and banks.

The BSE Realty index tumbled significantly as earlier investor optimism around the real estate industry was dampened by the finance minister’s proposal in the recent Union Budget to eliminate the indexation benefit on property sales. This benefit, which allowed homeowners to adjust their gains for inflation, could lead to a higher tax burden on real estate transactions and significantly impact property sellers.

Domestic indices soared to new record highs, with the Nifty 50 crossing the 25,000 level before grappling with global market weakness.

The BSE Power index attracted investors with an impressive 10 per cent rally over the last fortnight, driven by the strong performance of industry leader NTPC, which soared by 15 per cent. NTPC Ltd. attracted strong buying interest due to optimism about robust electricity demand and the company’s announcement of a significant investment of around Rs 50,400 crore in a nuclear power plant in collaboration with the Nuclear Power Corporation of India. Additionally, the company’s strong financial performance in Q1 contributed to the positive sentiment.

Amid a strong uptrend in healthcare stocks, Dr. Reddy’s Laboratories grabbed headlines with announcements regarding a stock split and Nestle India’s investment of Rs 705 crore in a joint venture with the company. A clear shift in investor sentiment was evident. While foreign institutional investors (FIIs) pulled out a significant Rs 17,477 crore over the past two weeks, domestic institutional investors (DIIs) have emerged as the market’s saviours, pumping in a substantial Rs 25,335 crore during the same period.