Surfing The High Tide

Despite talks of a longawaited market correction, the markets surprised everyone with a record 13-day winning streak, driven by global strength following the US Federal Reserve’s positive remarks at potential interest rate cuts, renewed investor optimism, and strong buying by foreign institutional investors (FIIs). The Indian benchmark indices, BSE Sensex and Nifty 50, posted gains of 2.4 per cent and 2.83 per cent, respectively, reaching new record highs on the bourses.

The broader indices outperformed the main benchmarks, with the BSE Mid-Cap index gaining by 3.53 per cent and the BSE Small-Cap index climbing over 4 per cent during the fortnight. Investor optimism was evident on the sectoral front as well. All the sectoral indices posted gains over the last fortnight, with metals, healthcare and IT stocks leading the rally. The BSE Metals index, which had been trading within a restricted range for the past few months, received a much-needed boost.

It emerged as the top-performing sectoral index for the fortnight, with gains exceeding 5 per cent. The shares of National Aluminium Company Ltd. witnessed a strong 11 per cent rally during the period due to significant buying. This uptrend followed the Indian trade ministry’s recommendation to impose an anti-dumping duty on aluminium foil imported from China in response to a surge in shipments from the neighbouring country despite sufficient local production capacity.

Hindalco Industries Ltd. was also among the best performers with an 11 per cent gain, following the company’s announcement of a major expansion involving investments totalling USD 10 billion. Significant investments by mutual funds in healthcare companies have kept the sector in robust health, as India’s healthcare industry grows strongly due to the rising incidence of chronic diseases, increased affordability from higher incomes, and deeper insurance penetration.

The benchmarks hit new record highs, with the Nifty 50 drawing global investors through a record 13-day consecutive winning streak

IT majors HCL Technologies Ltd. and Infosys Ltd. recorded a 5 per cent rally over the fortnight. The IT industry has garnered significant attention following the US Federal Reserve’s indication of a potential rate cut, with IT stocks showcasing global strength. Despite a recent emphasis on cost-saving transformation initiatives by businesses, experts anticipate that a favourable shift in the macroeconomic environment could enhance market sentiment. Both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) have emerged as key boosters for the market.

They have injected substantial amounts of ₹7,608 crore and ₹14,219 crore, respectively, during the fortnight. In other developments, India’s GDP grew by 6.7 per cent from April to June this financial year, the lowest rate in the past 15 months, due to reduced government expenditure and extreme heatwaves affecting consumer behaviour. The RBI is set to launch the Unified Lending Interface (ULI) platform, which will particularly focus on MSMEs and agricultural borrowers. Stay tuned for further developments!