Continuing their winning streak for the third consecutive trading session, Indian benchmark indices reached new record highs today, driven by strong support from the financial services sector. In addition, a rally in realty and auto stocks contributed to the market's strength, while the recovery in PSU stocks continued in today's session. All major sectoral indices closed in positive territory at the end of Monday's trading session.
As a result, the Nifty 50 reached a record high of 25,956 points, just shy of the 26,000 mark, before ending the day up 0.57 per cent at 25,939 points. Similarly, the S&P BSE Sensex touched a fresh record high of 84,928 points before closing at 84,864 points, 0.45 per cent higher than the previous close.
Among sectoral indices, Nifty PSU Bank led the gains with a rise of 3.40 per cent, followed by Nifty Realty, Nifty Oil & Gas, Nifty Auto, and Nifty Consumer Durables, which posted gains between 1.3 per cent and 2.5 per cent.
Out of the 50 constituents of the Nifty 50, 34 closed in the green. Bajaj Auto led the gains with a 3.7 per cent increase, followed by Mahindra & Mahindra, ONGC, Hero MotoCorp, SBI Life Insurance, SBI, HDFC Life Insurance, Airtel, BPCL, and Coal India, all posting gains between 2 per cent and 3.3 per cent.
Commenting on today's market performance, Vinod Nair, Head of Research at Geojit Financial Services, said, "The euphoria from the FED rate cut continued to lift the domestic market. The benign input costs and an expectation of a change in stance by the RBI amid cuts by global banks will provide tailwinds to valuation. Though there is moderation in India PMI data, investors anticipate that the wave of liquidity from FII may provide stability in the sentiment."
Nifty 50 rose by 2.5 per cent following the Federal Open Market Committee (FOMC) decision to lower the Fed funds rate by 50 basis points Historically, India's equity markets have performed well three to six months after the first rate cut in a non-recessionary environment.
However, global brokerage firm Goldman Sachs observed that the gains were relatively modest compared to other rate-sensitive markets in the Asia-Pacific region. Sectors such as consumer discretionary, industrials, and IT have historically benefited from non-recessionary rate cuts.
The stocks of PSU banks extended their recovery trend in today’s trading session, with all 12 constituents of the Nifty PSU index closing in positive territory. The Bank of Maharashtra led the gains, rising by 8.1 per cent, followed by Punjab & Sind Bank, Indian Bank, Central Bank of India, and UCO Bank, all finishing with gains above 5 per cent.
Additionally, stocks like Indian Overseas Bank, Canara Bank, Bank of Baroda, Union Bank of India, Punjab National Bank, State Bank of India, and Bank of India recorded gains between 1.9 per cent and 4.5 per cent.
Real estate stocks performed well in today's session, marking their third consecutive day of gains. The Nifty Realty index soared by 2.60 per cent during intraday trading, reaching a two-month high before closing the session up 2.23 per cent at 1,126 points.
All 10 constituents of the index ended the day in positive territory, with Godrej Properties leading the way, gaining 6.8 per cent to close at 3,192 points. DLF and Sobha also finished the trading session with gains exceeding 3 per cent.
Amit Golia, Group CEO of MarketsMojo, said, "The U.S. Federal Reserve's decision to cut rates by 50 basis points signals a shift in global monetary policy, and its ripple effects are felt across global markets, including India. Sectors benefiting from lowering interest costs might include real estate and infrastructure companies, which are heavily debt-funded."
The recent surge in Indian equities is largely attributed to significant inflows from Foreign Portfolio Investors (FPI). Experts believe that the markets will likely maintain their upward momentum if these inflows persist.
September has seen the second highest inflows of 2024 to date. Data from NSDL shows that, FPIs have invested a net total of ₹33,691 crore in Indian equities this month so far.
Manoj Purohit, Partner & Leader of Financial Services Tax at BDO India, said, "Despite global uncertainties, the strong FPI inflows into India are driven by key factors such as balanced fiscal deficits, the impact of rate cuts on the Indian currency, strong valuations, and the RBI's commitment to controlling inflation without resorting to a rate cut."
He also added that Indian IPOs have drawn significant foreign funds, making the Indian capital market more buoyant and an attractive option for investors looking to shift their positions from riskier countries.
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.
