Banks, capital goods and oil and gas stocks catapulted the Nifty index to a record high of 22,353.30 points, and the Sensex to 73,819.21 on Friday. This was driven by temporary domestic institutional investors buying from ₹3,814.53 crore and proprietary dealer purchases of ₹618.58 crore, BSE data shows.
Foreign portfolio investors bought shares worth net ₹128.94 crores.
Investor wealth, in effect, increased by ₹4.37 trillion.
“The impressive GDP numbers provide the bulls with the ammunition to catapult Indian indices to all-time highs,” said Devarsh Vakil, vice-head, retail research, at HDFC Securities, underscoring the bullishness on the Street. “The next entry targets to be looked at are around 22,500-22,600 levels. Immediate support is at 22,200 levels.”
India’s GDP expanded by 8.4% in the December quarter, well ahead of the 6.6% average growth projected in a Mint survey of 17 economists, and almost twice as fast as the 4.3% pace recorded in the third quarter of FY23. For FY24, the statistics ministry on Thursday said it expected India’s economy to grow at 7.6%, ahead of RBI’s 7% projection.
The Nifty ended Friday’s trade 1.6% higher at 22,338.75 points, its highest percentage gain in six months. The Sensex climbed 1.72%, the most in more than a month, to 73,745.35 points.
The top five stocks that contributed nearly three-fifths of the Nifty’s 355.95-point rally were ICICI Bank Ltd, Reliance Industries Ltd, HDFC Bank Ltd, Larsen & Toubro Ltd, and State Bank of India.
Stocks that surged to fresh lifetime highs included Reliance Industries ( ₹3,000 per share), ICICI Bank ( ₹1,089.95), Tata Motors ( ₹980.4), and Adani Ports ( ₹1,349).
The broad-based nature of Friday’s rally was reflected by the Nifty Midcap 150 and the Nifty Smallcap 250 indices rising 0.8% and 0.64%.
The biggest sectoral gainers were the Nifty Metal index, which gained 3.62%, and the Bank Nifty, which gained 2.53%.
While metals gained on growth in the manufacturing sector, banks rose on hopes of an earlier-than-expected cut in interest rates by the Reserve Bank of India to address tepid growth in private consumption.
Lowering rates would mean that banks would not have to raise deposit rates as quickly, which could consequently improve their net interest margins – a measure of profitability for lenders.
“The momentum in the market could continue, led by large private banks that have been lagging since the last few months,” said Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies.
Holland said India’s robust GDP growth was attributable to impressive tax growth and fewer subsidies. But weak growth in private consumer spending, at just 3.5% in the third quarter, warranted a rate cut by the RBI before the US Federal Reserve cuts its interest rates.
“Markets would be concerned about the 10-year government bond yield falling below 7%, which would be a precursor to an earlier-than-expected RBI rate hike,” Holland said.
“The markets will start discounting this and the biggest beneficiaries would be the big private banks, which have so far missed out on the rally. FPIs could resume buying from some of the big names, which, in turn, could continue the momentum in the Nifty and Sensex, where financials enjoy the highest weightage,” he added.
Financial services stocks have a 32.48% weight on the Nifty, followed by IT stocks (14.46%), and oil and gas companies (12.99%).
Madhusudan Muralidhar Kela, managing director, MK Ventures, said large caps, which have relatively underperformed the small and midcaps, could boost the stock market’s rally, and given the momentum, any dips would buy opportunities.
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Published: 01 Mar 2024, 19:55 IST