Realty Gains While Banking Slips

Overall, the indices have finally reached all-time highs, boosted by significant FII inflows and improved economic conditions, including a fall in retail inflation and a rise in industrial output

The Indian benchmark indices have experienced frequent gains and losses over the past two weeks, making it feel like a roller-coaster ride. Nevertheless, the indices finally reached all-time highs on the bourses after receiving the much-needed boost thanks to a significant FII inflow and improving economic conditions. The indices fell roughly 1 per cent after reaching fresh highs, owing to heavy losses in IT stocks, which resulted in a nearly 2 per cent drop in the sectoral index BSE Information Technology in just two sessions. 

However, the BSE Sensex and Nifty 50 were still able to end the fortnight with gains of 0.56 and 0.55 per cent, respectively. The broader indices have continued to outperform the main indices, with the BSE Mid-Cap index gaining 1.67 per cent and the BSE Small-Cap index surging 1.91 per cent in the last two weeks. Being the top gaining sector, the BSE Healthcare index soared 3 per cent during the fortnight, as it frequently led sectoral gains thanks to growth drivers such as strong Quarterly Results, significant bonuses from health insurance companies and new product developments. 

BSE Realty continued its upward trend, gaining 1.69 per cent in the past two weeks and delighting investors by producing returns of about 20 per cent over the last six months. According to CRISIL Ratings, residential real estate developers in India’s top six cities are likely to record an 8-10 per cent growth in sales in the current financial year 2023-24, despite surge in interest rates and home prices in the last financial year. The BSE Bankex sector had the worst performance as the majority of banking stocks were under intense selling pressure, while the shares of State Bank of India fell for several sessions in a row, resulting in a decline of 4 per cent during the fortnight. 

In addition, the Reserve Bank of India imposed penalties on a number of banks for non-compliance with regulations. BSE Fast-Moving Consumer Goods (FMCG) and BSE Metals were among the gainers, while power and automotive stocks suffered notable losses. According to information issued by the Ministry of Statistics and Programme Implementation, India’s headline retail inflation rate fell for the fourth consecutive month in May, lowering to 4.25 per cent from 4.70 per cent in April.

RBI Governor Shaktikanta Das stated that the central bank will try to bring headline inflation to its 4 per cent target but mentioned that El Nino could be a challenge to such efforts. As per the data released by the Ministry of Statistics and Programme Implementation, India’s industrial output soared by 4.2 per cent in April. Both FIIs and DIIs have been net buyers over the last fortnight. In the last 15 days, FII inflows totalled ₹6,647.48 crore while DII inflows recorded ₹3,012.29 crore.