Home >Markets >Stock Markets >How the Robinhood craze is moving the Indian stock markets

Indian stock markets have soared to record high levels led by gains in index majors, positive trend in global markets and macro factors. Benchmark index BSE Sensex today crossed 54,000 mark for the first time, a day after Nifty surpassed the milestone of 16,000, and continued to trade above the all-time high level.

Experts believe that retail investors and mutual funds flush with funds from NFOs (new fund offers) are driving this market despite selling pressure from foreign institutional investors. As per data compiled by Bloomberg, domestic institutional investors such as mutual funds and insurance firms have bought about $2.5 billion of Indian stocks in July.

"Sometimes amateurs beat professionals. This is happening in the Indian stock market now. FIIs, often regarded as representing smart money, have been pushed back by the sheer momentum of retail investors. FIIs who have been consistently selling in July on rational hopes of a correction in the overvalued market have been forced to buy ( 2,117 crore in cash market yesterday) on fears of losing out on the momentum,'' said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

As first-time investors turned up to the stock markets amid the covid pandemic, the number of retail investor account surged nearly 35% in the financial year ended March to reach 55 million, led by Robinhood investors (the term used for millennial/retail investors), a trend similar to what is being seen in developed markets like the US.

With the institutional money pouring in, Vijayakumar expects large caps to outperform if the market continues its upward momentum. ''Having broken the 15950 Nifty upper band decisively, sheer momentum may take the market higher. Leading banking stocks, which have been underperforming in this rally, are likely to catch up.''

Today, the Nifty Bank sub-index was up nearly 2% with HDFC Bank, ICICI Bank and Kotak Bank leading the charge.

Reiterating its Nifty target of 18,000 by December 2021, Amar Ambani, Senior President & Research Head, Yes Securities said: "Corporate balance sheets have been significantly strengthened with record equity raise in FY21. On the revenue front, the listed universe is on firm ground with accelerated trend of unorganized to organized, digital super-cycle and sustained cost management."

''We expect the government to continue spending on infrastructure and fast track the reform agenda as we have seen with lowered corporate tax rates, PLi schemes, RBI support, strategic divestments and so on. With accommodative financial conditions worldwide, we see the mega rally in risk assets to continue," he added.

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