Nifty, Sensex Touch Record High; Market Capitalisation Of BSE-listed Stocks Hit $4 Tn
Propelling Sensex and Nifty to near record high levels once again, benchmark equity indices on Wednesday rallied over 1 per cent with the market capitalisation of all BSE-listed stocks crossing the USD 4 trillion milestone for the first time in history.
While Sensex ended 728 points higher at 66,902, Nifty advanced 207 points to end at 20,143 as investors turned their attention to blue chip stocks.
Here are 7 factors that triggered the rally on Wednesday:
1) Fed commentary - Fed governor Christopher Waller has flagged the possibility of lowering the interest rate in the months ahead if inflation continues to come down. Traders are now pricing in a more than 70 per cent chance of rates easing in May, compared with a 50 per cent chance on Tuesday, CME's FedWatch Tool shows.
2) FII buying - Foreign investors, who were on a selling spree in the last two months have now turned into net buyers of Indian stocks. Tuesday's data shows that FIIs bought Indian shares worth Rs 784 crore. So far in the month, net FII buying stands at Rs 2,901 crore, according to NSDL data.
3) Revenge of blue-chips - Blue-chip stocks, which have been under selling pressure in the last few weeks amid investor preference for smaller stocks, are now showing signs of an uptick. Wednesday's rally was supported by both Nifty Bank and Nifty IT indices, which rallied 1.5 per cent each. Axis Bank ended 3.7 per cent higher while HDFC Bank also increased 2 per cent.
4) Global markets - Asian shares mostly fell on Wednesday although a strong report on US consumer confidence and hopes the Federal Reserve is finished with its aggressive interest rate hikes sent shares higher on Wall Street. Japan's benchmark Nikkei 225 declined 0.3 per cent. Hong Kong's Hang Seng dropped 2.4 per cent, while the Shanghai Composite fell 0.5 per cent. Meanwhile, European stocks edged up 0.1 per cent in early trading, with Frankfurt shares leading gains after the German data.
5) Crude oil - Oil edged higher on Wednesday as investors turned cautious ahead of a crucial OPEC+ meeting to decide output policy in the coming months. At the same time, a supply disruption caused by a storm in the Black Sea provided a lift for prices. Brent crude futures climbed 76 cents to USD 82.23 a barrel at 3.42 pm. US West Texas Intermediate (WTI) crude futures gained 73 cents, or 0.93 per cent at USD 77.11 a barrel. However, both benchmarks have fallen by more than 16 per cent in the last two months.
6) Bond yields - Treasury yields hit multi-month lows on Wednesday after a US Federal Reserve official made fresh hints of interest rate cuts. The two-year yield hit its lowest since mid-July at 4.69 per cent and the benchmark 10-year yield fell 6 bps to its lowest since September at 4.28 per cent.
7) Dollar Index - The dollar index, which tracks the greenback's movement against the world's six major currencies, rose 0.12 per cent to 102.87 on Wednesday, although it has declined 3.7 per cent in the past month. The dollar index falling below 103 is positive for equity markets. Also, on Wednesday, the rupee ended at 83.32 against the dollar, little changed from its close at 83.33 in the previous session.
FII and FPIs, on Wednesday, saw a net purchase of Rs 71.91 crore in the cash segment. A total of Rs 15,969.42 crore was sold against a total purchase of Rs 16,041.33 crore. Domestic institutional investors saw a net purchase of Rs 2,360.81 crore in the cash segment. A total of Rs 8,561.69 crore was sold against a total purchase of Rs 10,922.50 crore.
Meanwhile, Nifty's recent crossing of the psychological level of 20,000 and the BSE market cap's ascent to the USD 4-trillion mark signals the start of a fresh momentum. Domestic liquidity has provided support, but the lack of foreign inflows due to high US bond yields has been a hindrance. Fortunately, interest rates in the US have peaked, and the dollar index is declining, which is expected to attract foreign institutional investor (FII) inflows into the Indian equity market.
Technically, the important key resistances are placed in October Nifty future are at 20,143 levels, which could offer for the market on the higher side. Sustainability above this zone would signal opens the door for a directional up move with immediate resistances seen at 20,188 – 20,303 levels. Immediate support is placed at 20,008 – 19,939 levels.
