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The Sensex, driven by the ongoing bull run, crossed the 70,000 mark for the first time during intraday trade on Monday. The benchmark index peaked at 70,054 during the day before trimming some gains, ahead of the Federal Reserve policy announcement on Wednesday, where the US central bank is anticipated to maintain rates within the 5.25-5.5 per cent range.
The 30-share index closed at a fresh high for a fifth time this month, ending at 69,928 — an increase of 103 points, or 0.15 per cent.
The Nifty50, after surpassing 21,000 for a second consecutive session, closed at 20,997, up by 28 points, or 0.13 per cent. The broader markets outperformed, with the Nifty Midcap 100 and the Nifty Smallcap 100 gaining 0.74 per cent and 0.84 per cent, respectively.
The market capitalisation of all BSE-listed companies reached a new high of ~351 trillion ($4.2 trillion).
While most Asian markets declined, the European markets traded flat. US markets, on the other hand, opened in the green.
The sharp decline in US bond yields, fuelled by growing optimism that the Fed will pivot to a series of interest-rate cuts next year, has triggered an unprecedented bull run in global equities since October. Domestic factors, such as better-than-expected GDP growth during the September 2023 quarter and hopes of political continuity at the Centre following the Bharatiya Janata Party’s recent victory in three state elections, have further bolstered sentiment towards the Indian markets, which had underperformed the global markets last month.
The Indian economy expanded by 7.6 per cent during the September quarter, surpassing the Reserve Bank of India’s estimate of 6.5 per cent. The purchasing managers’ index (PMI) for manufacturing also rose to 56 in November, up from 55.5 in October, indicating expansion.
The better-than-expected economic growth figures for the September quarter prompted several economists and even the Reserve Bank of India to revise its growth projections for the current financial year to 7 per cent from earlier 6.5 per cent.
“A combination of interest rates at the top of the cycle, bank balance sheets and capital adequacy are at their best shape in many years, and combine it with political certainty, you should see a doubling private sector capex in two-three years, and that will be the driver of stocks market rally and economic recovery,” said Saurabh Mukherjea, founder and chief investment officer of Marcellus Investment Managers.
Investors will closely monitor the inflation data from India and the US and the monetary policy decisions by the Fed, European Central Bank, and Bank of England for further cues.
“This week is heavy in terms of data. If the consumer inflation in India is not good, then that is going to worry the markets, and we have the Fed’s announcement this week. If the outcomes of the data releases and announcements are positive, then the markets could rally further for some time until something brings them down. I do not see any such headwind at the moment, but this week could point out what that risk could be,” said Andrew Holland, CEO of Avendus Capital Alternate Strategies.
The market breadth was positive, with 2,372 stocks gaining and 1,499 declining. Two-thirds of Sensex stocks gained. ICICI Bank, which rose 0.6 per cent, contributed the most to Sensex gains.
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