Nifty 50 soars 7% in June, largest monthly gain since December 2023; index up over 10% in first half of 2024

It appears that the bulls have asserted complete dominance over the Indian market, leaving no opportunity for the bears to intervene. Achieving new record highs, surpassing significant milestones, and establishing fresh benchmarks have become routine during this recent bullish phase.

Consequently, leading Indian indices have consistently surpassed their previous record highs day by day, extending the period of sustained positive momentum. In today's trading, the Nifty 50 achieved another milestone by surpassing 24,100 points for the first time, reaching a new record high of 24,174 points.

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During the previous trading session, the index crossed the 24,000 mark for the first time and carried its momentum into today's session. June concluded with the index recording a gain of 6.57%, marking its highest monthly increase in 2024 and the largest since December 2023.

This momentum underscores robust investor confidence and optimism, driven by positive economic indicators, expectations of policy continuity, and renewed foreign inflows.

Remarkably, the index reached new record highs on 12 occasions in June alone, bringing the total record attempts for CY24 to 38. June was also marked by significant volatility, with the index fluctuating widely by 2,608 points.

It took just 23 sessions for the Nifty 50 to rise from the 23,000 to the 24,000 level, marking the second-fastest 1000-point rally.

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The rally in private banks, supported by heavyweights like HDFC Bank, Axis Bank, and ICICI Bank, and the resurgence in IT stocks have driven the index to maintain its strong bullish momentum throughout the majority of June.

Additionally, the strong participation from FMCG stocks led the Nifty FMCG index to record its largest monthly gain in 2024, rising by 4.90%.

This surge follows the new coalition government's focus on the rural economy, marked by the release of a ₹2,000 instalment for farmers, financial assistance for the construction of 30 million new houses in rural and urban areas, and a recent increase in Minimum Support Prices (MSP) for 14 Kharif crops for the 2024–2025 season.

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What led to the rally?

Following the unexpected results of the Lok Sabha 2024 elections on June 4, which initially led to the Nifty 50 recording its worst intraday performance in four years, the index swiftly rebounded in subsequent sessions. This recovery was bolstered by the formation of a BJP-led NDA government at the center, reassuring investors of policy continuity and political stability.

Foreign portfolio investors (FPIs) returned to Indian markets vigorously after clarity emerged on the political landscape, supporting retail and domestic institutional investors and propelling the markets to unprecedented levels.

Foreign portfolio investors bought 188 billion rupees ($2.3 billion) of shares in the month until June 27, on course to snap a two-month selling streak.

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From its low of 21,281 points on June 4, the index surged by 12.77% over the next 17 sessions, experiencing only minor declines averaging 0.3% on just three days.

Despite global uncertainties such as the Federal Reserve revising down its rate cut projections for 2024 from three to one, escalating tensions in the Middle East, rising crude oil prices, and a stronger dollar, investor sentiment remained resilient.

Moreover, the index outperformed the first half of CY23's performance of 5.99% by achieving a robust 10.50% gain during the same period. 34 stocks ended the first half of CY24 with gains exceeding 5%, with auto stocks leading, followed by financials.

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In the first half of the current year, Mahindra & Mahindra emerged as one of the top gainers, with an impressive increase of 66%. Following closely was Adani Ports & SEZ, which saw a rally of 44.3%. Additionally, shares of Shriram Finance, Bajaj Auto, Bharti Airtel, Power Grid Corporation, Hero MotoCorp, BPCL, ONGC, Tata Motors, SBI, and Coal India all concluded with gains ranging between 30% and 42%.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.