Market Mood Turns Optimistic

The pause in interest rate hike, optimism sparked by stronger economic data and a sizeable FII inflow were some of the main drivers behind the market rally .

The Indian benchmark indices have exhibited a strong performance over the past two weeks, posting back-toback gains in each of the sessions. The BSE Sensex consequently enjoyed a much-needed rally and soared 2.24 per cent, while the Nifty 50 gained 2.47 per cent over the fortnight. A considerable buying interest was also witnessed in the broader markets. The BSE Mid-Cap index gained in line with the main indices, while the BSE SmallCap index outperformed, climbing 3.22 per cent. Optimism brought on by stronger economic data and a significant FII inflow were some of the main drivers of the rally. 

In a surprising move that defied market forecasts of a 25 basis point interest rate hike, the Reserve Bank of India (RBI) held the repo rate unchanged at 6.5 per cent amid global financial market volatility and potential risks. According to the finance ministry, the monthly GST collection in March surged 13 per cent year-on-year to ₹1.60 lakh crore, making it the second highest monthly collection ever – indicating economic strength amid a number of headwinds. Retail inflation fell to a 15-month low of 5.66 per cent in March, owing mostly to a favourable base effect and reduced food prices. 

Additionally, data from the Ministry of Statistics and Programme Implementation highlighted that India’s industrial output strengthened by 5.6 per cent in February. BSE Realty emerged as the best performing sector with gains of 8.9 per cent led by a 22 per cent surge in shares of Godrej Properties Ltd. DLF Ltd. and Indiabulls Real Estate Ltd. also contributed significantly, soaring 13-14 per cent each. Real estate investments are picking up due to the appealing rental returns and the possibility of future price appreciation. Also, the amount of unsold inventory is at multi-year lows, as the number of home purchase registrations and new home bookings is on the rise. With gains of 3.87 per cent, BSE Auto was also among the top-gaining sectors over the past two weeks. 

The majority of vehicle categories had double-digit growth in March, according to the Federation of Automobile Dealers Associations, which was aided by new product releases and improved product accessibility. Sales of passenger vehicles in India shot up by 26.7 per cent in the financial year 2022-23 as the demand for sport utility vehicles (SUVs) grew and chip shortages lessened. Metals, healthcare and banking sectors gained strength whereas BSE Information Technology was the only one to fall due to a variety of variables, the key ones being attrition and recessionary fears. Surprisingly, while FIIs were the net buyers over the past two weeks, DIIs have turned to being net sellers. The DII outflow was recorded at ₹2,683.95 crore whereas FII inflow was recorded at ₹4,959.72 crore in the past 15 days.