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Business News/ Markets / Stock Markets/  Four reasons why Indian stock market skyrocketed today — explained

Stock market today: After a gap of 36 sessions, NSE Nifty climbed to a new peak of 20,008 during Monday deals. However, the 50-stock index took 52-sessions to race from 19,000 to 20,000 peak. While Nifty rallied to 20,000 peak, BSE Sensex too regained 67,000 mark. 

According to market experts, this rally in key benchmark indices are mainly due to the participatory rally in most of the Indian indices. They said that contininuous inflows by FII, DIIs and Indian retail investors have led to rise in Indian indices at record highs. On recent triggers that worked in favour of the Indian stock marekt rally, they said that resounding success of G20 has also attracted global investors towards Indian markets.

FII inflows

Speaking on the reasons that led to rise in Nifty at 20,000 peak, Saurabh Jain, Vice President — Research at SMC Global Securities said, "Continuous inflows from FIIs, mutual funds and other DIIs have led to participatory rally in Indian stock market as we witnessed rally in stocks ranging from small-cap, mid-cap to large-cap on a regular basis in recent few months. Retail investors have also pumped good amount of money in the markets when FIIs were selling in early 2023 and late 2022. This led to huge jump in the Indian indices when FIIs came back to the Indian markets."

G20 connect

Pointing towards G20 connect in current market rally, Kaushik Dani, Fund Manager – PMS at Abans Investment Managers said, “Resounding success of G20 brings in the desired momentum and market valuations are yet to cross previous peaks. Boost in bilateral trades should benefit various segments like pipes and cables. Sectors like Railways, Shipping and Logistics would be direct beneficiaries of recent announcements. With corporate earnings gaining strength, indices seem comfortable to march forward in near to medium term."

“Markets are in a euphoric mode and have conquered the 20,000 mark today, with 20,500 levels looking on the horizon for this month. The optimism surrounding the Indian economy, especially after a strong show at the G20 summit, is fuelling the current rally in markets. Against the backdrop of underperformance in the small cap space during 2018-22 period and growth in earnings thereafter, we continue to believe that there is still steam left in the select mid and small cap space considering their improved revenue visibility," said Manish Chowdhury, Head of Research at StoxBox. 

"Nifty has finally managed to touch the much anticipated 20,000 mark in the second attempt post July 2023. Robust flows from the local investors amidst mixed/negative flows from foreigners has helped Nifty achieve this landmark. Successful achievements recently in space and foreign diplomacy by India has boosted sentiments for Indian stocks generally in an era when the global situation is still shaky. Smallcap and Midcap stocks have run up quite sharply and in some cases unjustifiably so. Review of asset allocation and booking some profits/raising some cash is advised," said Dhiraj Relli, MD & CEO, HDFC Securities.

Edge for India over China, Brazil

On reason for FIIs pumping money in Indian markets, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "As FIIs are looking for a safe haven as US equities are yet to come out of the inflation pressure, they are looking at emerging markets where China, Brazil and India have remained their favourite destinations. But, after the spread of Covid-19, China has become a blackbox and Brazil is fighting with political uncertainty. Hence, FIIs are betting high at Indian markets and hence they started buying above their selling levels as DIIs continued its support to the Indian markets when FIIs were net sellers."

Participatory rally

On sectors that fueled Nifty, Sensex and other indices at record high levels, Saurabh Jain said, "Most of the segments have rallied in recent months but capital goods, power, PSUs and real estate haver outperformed other indices." He advised fresh entry in power and capital goods stocks after 7-10 per cent correction from current levels as these two themes are expected to further continue in short to medium term.

Stock market strategy

Unveiling stock market strategy after Nifty hitting 20,000 peak, Saurabh Jain of SMC Global said, “Markets are at peak and hence those who want to maximise their returns are advised to book at least partial profit so that they can buy again at lower levels after profit booking trigger. Selective buying should be followed as majority of stocks are at higher levels and their chances to cliimb further upside are limited."

"We advise investors to keep an eye on large cap space as well as the risk-reward have become favourable for the IT sector and few heavyweights such as Reliance Industries, HDFC Bank and ITC. The overall texture of the market remains positive and we continue to advise buy on dips strategy for new entrants. As far as 21,000 levels on the index, we feel it would be premature to ride this kind of upside in the near-term and would revisit the markets at the end of the month," said Manish Chowdhury of StoxBox.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Asit Manohar
Chief Content Producer at Live Mint Digital Team
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Updated: 11 Sep 2023, 04:38 PM IST
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