Optimism Makes A Mark

The Indian benchmarks reached new record highs, with BSE Sensex soaring past the 80,000 mark and achieving its quickest-ever 10,000-point rally 

The Indian benchmark indices sustained their robust uptrend, consistently hitting new all-time highs over the past fortnight. BSE Sensex soared past the 80,000 mark, achieving its quickest-ever 10,000-point rally in just 138 trading sessions, while Nifty 50 breached the 24,300 level. Reliance Industries Ltd. emerged as a significant catalyst in the recent fortnight rally, with its shares—a key component of Indian benchmarks—surging over 9 per cent. The company’s market capitalisation surpassed the milestone of ₹21 lakh crore, setting a new record high.

This was following Jio’s announcement of increased pricing for its prepaid and post-paid plans. BSE Sensex and Nifty 50 recorded gains of 3.6 per cent and 3.5 per cent, respectively, while the broader indices showed a mixed performance. The BSE Mid-Cap index, breaking its trend of outperforming, added 3.2 per cent, whereas the BSE Small-Cap index outpaced the main indices with a gain of 4.27 per cent. Investors’ optimistic sentiment was evident across the sectoral front, with all the sectoral indices, except for real estate, reporting notable gains.

Real estate stocks saw some profittaking, with the BSE Realty index having surged around 18 per cent in just 10 trading sessions after the Lok Sabha election results day’s slump, reflecting strong gains. Strong financial performance, reduced inventory levels and successive price hikes have collectively driven the surge in demand for real estate stocks. Banks, metals and automobile stocks, which led the gains during the earlier period, experienced a brief pause in their rally.

In contrast, IT stocks attracted investors, with the BSE Information Technology index emerging as the best performer for the fortnight, gaining over 6 per cent. There has been a noticeable shift in stance for IT stocks following the election results, marking a comeback after a prolonged period of underperformance. Federal Reserve Chair Jerome Powell’s suggestion of ‘considerable progress’ towards overcoming severe inflation, coupled with ongoing optimism amid signs of a slowing job market, indicates that rate cuts may be on the horizon.

Over the past two weeks, both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) have consistently been net buyers. FIIs recorded a significant net inflow of ₹11,497 crore, while DIIs further strengthened the market with a considerable net inflow of ₹6,800 crore during the same period. With the Union Budget scheduled for July 23, experts are anticipating significant announcements in key government focus areas such as affordable housing, renewable energy, infrastructure, semiconductors, electric vehicles, railways, defence and artificial intelligence. It will be interesting to see how the market responds to these developments. Stay tuned!