A softer-than-expected inflation in the US and UK, which could signal a dovish stance from central bankers, drove indices across the world on Wednesday.
For Indian investors, the good news was that investor wealth hit an all-time high of Rs 325.38 trillion on Wednesday, an increase of Rs 3.27 trillion from Monday.
Realty, IT and technology stocks pushed the rally in the benchmarks. BSE Realty rose 2.97%, BSE Information Technology climbed 2.29% and BSE Teck rose 2.12%.
The mid-cap and small-cap indices also surged to close at their all-time highs. BSE MidCap climbed 0.91%, or 300 points, to end at 33,117.87. BSE SmallCap index jumped 1.13%, or 438 points, to close at 39,252.56.
The stock prices of large caps like HDFC Bank, Reliance Industries, Kotak Mahindra Bank in which most of foreign investors invest, were up today, around 1-2% which fueled the rally, said independent market expert Neeraj Dewan. “Going ahead, if FIIs are turning positive then the large caps and the blue chips could outperform the mid and small caps,” he added.
According to provisional NSE data, foreign portfolio investors turned net buyers of Indian equities, buying stocks worth Rs 550.19 crore. Domestic institutional investors remained net buyers and purchased Rs 609.82 crore.
The market’s gap-up jump in response to positive global cues and easing bond yields is likely to draw FII flows into emerging markets, said Vinod Nair, head, research at Geojit Financial Services. This will bode well for India considering the current better earnings season, festive demand pick up and a drop in the consumer price index.
Dewan also expects this market rally to sustain in the near-to-medium term owing to robust data, such as auto sales numbers, good earnings and lower inflation data.
“Going ahead we could also expect RBI to also cut rates if not by end of this year then early next year,” he added. Interest rates have peaked and it is supporting interest rate-centric sectors such as real estate, automobiles and auto ancillaries to do well, he added.
However, the only problem, according to the market expert, is the upcoming general and state elections. “Any disappointment in state level will still be short-lived, but all eyes will be on general elections,” he added.
Shrikant Chouhan, head, equity research at Kotak Securities said, “We are of the view that, the short-term market texture is robust but due to temporary overbought conditions, we could see positive consolidation activity in the near future.
