Nifty Takes 36 Sessions To Cross Previous Peak & Goes On To 20,000 Mark
After playing hide-and-seek for the last two months, the magical number of 20,000 was finally seen on Nifty on Monday as investor optimism around India's leadership at the G20 summit overshadowed worries arising out of crude hitting the USD 90 mark.
Nifty Midcap, Nifty Smallcap, Nifty PSU Bank, Nifty Auto, Metal and Realty indices also hit record highs. Sensex, which ended at 67,127, is still 493 points away from a record high of 67,619.
The headline index, which ended in the positive for the seventh straight day, was range-bound in the last few weeks but small and midcap stocks have been hitting record highs.
Here are the key factors behind today's rally:
1) G20 Optimism - The G20 Delhi Declaration and India’s diplomatic triumph triggered the continuation of the positive market mood and momentum. More importantly, the inclusion of the African Union in G20 and the proposed India-Middle East-Europe Corridor have positive economic and market connotations.
PM Modi's announcement of the India-Middle East-Europe Economic Corridor, which will improve India's rail, and port connectivity with the US, UAE, and Saudi Arabia, led triggered a rally in many stocks. Adani Ports ended 7 per cent higher while rail stocks like IRCON, RITES, IRFC, and RVNL rallied up to 20 per cent. Stocks related to sugar and ethanol rallied on the announcement of the G20 Biofuel Initiative over the weekend. Boost in bilateral trades should benefit various segments like pipes and cables. Sectors like railways, shipping and logistics would be direct beneficiaries of G20 announcements.
2) Support from heavyweights - Today's buying was led by positive momentum seen in heavyweight Reliance Industries (RIL) and bank stocks. Adani Ports was the top gainer in the Nifty pack and rallied 7 per cent. Barring media, all major sectoral indices were trading in the green. Nifty Bank, Fin Nifty, Nifty FMCG and Nifty IT were up around 1 per cent each, while Nifty Auto rallied 1.7 per cent.
3) Retail/DII effect - Both retail and other domestic institutional investors have been pouring money on Dalal Street even as FIIs have been net sellers so far in September. On Friday, DII buying was more than Rs 1,100 crore. August month data shows that equity mutual fund inflows more than doubled to Rs 20,245.26 crore while SIP contribution stood at an all-time high of Rs 15,813.54 crore.
FII and FPIs, on Friday, saw a net sales of Rs.224.22 crore in the cash segment. A total of Rs.10074.71 crore was sold against a total purchase of Rs.9850.49 crore. Domestic institutional investors saw a net purchase of Rs.1150.15 crore in the cash segment. A total of Rs.7173.90 crore was sold against a total purchase of Rs.8324.05 crore.
Meanwhile, What is really impressive about Nifty reaching this all-time high level is that it has been driven mainly by local flows in recent months, while FPI flow has been relatively subdued, partly due to limited global interest in Asia funds given the weak outlook for China which has a very high weightage in the region.
The positive mood on Dalal Street is also led by expectations of easing inflation, driven by a decline in vegetable prices. The return of China from deflation, growth in new bank loans, and reduced concerns about US rate hikes have paved the way for the domestic markets to reach new all-time highs.
Technically, the important key resistances placed in August Nifty future are at 20046 levels, which could offer the market on the higher side. Sustainability above this zone would signal opens the door for a directional upmove with immediate resistances seen at 20188 – 20202 levels. Immediate support is placed at 19977 – 19808 levels
