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The Indian stock market continued its bullish run on Wednesday, with the benchmark Nifty index extending its winning streak to a remarkable 10th consecutive session, the longest since October 2020. This surge propelled the Nifty past the 25,100-point mark for the first time ever, closing at 25,052.35 points, a 0.1% increase from the previous day. The Sensex, while also rising by 0.1%, closed at 81,785.56 points, just 80 points short of its own record closing value.
This sustained market momentum is largely attributed to positive global and domestic macroeconomic trends. Hopes of a rate cut by the US Federal Reserve, coupled with easing concerns over the growth prospects of the world's largest economy, have instilled optimism among investors. Domestically, the recent Cabinet nod for eight new railway projects worth Rs 24,657 crore, along with a pact signed by RVNL with Dhaya Maju Infra for railway projects in the ASEAN region, have further bolstered market sentiment.
While the Nifty reached a record intra-day high of 25,129.6 points, profit-booking emerged ahead of the monthly expiry of derivatives contracts on Thursday. This, however, did not derail the overall upward trend. Although Foreign Portfolio Investors (FPIs) turned sellers, offloading shares worth Rs 1,347.53 crore after five consecutive sessions of buying, domestic institutional investors continued their buying spree, injecting Rs 439.35 crore into the market.
Over the past 10 sessions, the Nifty has climbed by 3.8%, while the Sensex has gained 3.6%, registering gains in nine out of the 10 sessions. This robust performance has extended to broader market indices as well, with the BSE Midcap index ending flat and the BSE Smallcap index falling marginally by 0.1%.
Despite the bullish momentum, market analysts caution about the prevailing rich valuations and the possibility of a shallow correction. Shrikant Chouhan, Executive VP and Head of Equity Research at Kotak Securities, highlighted that most major domestic events have concluded, which might slow down the pace of gains going forward. He anticipates a shift towards a ‘shallow correction rotation’ in the market.
Echoing this sentiment, Vinod Nair, Head of Research at Geojit Financial Services, pointed out that valuation remains a concern in the near term, and the upcoming India Q1 FY25 GDP data this week will further test this valuation narrative. Sectorally, only Nifty IT, Nifty Healthcare, and Nifty Pharma indices closed higher on the NSE.
The continued surge in the Indian stock market, fueled by a confluence of positive global and domestic factors, suggests a strong sentiment among investors. However, the persistent high valuations and the potential for a correction in the near term remain key considerations for market participants. The upcoming GDP data will likely provide further insights into the trajectory of the Indian economy and its impact on market performance.
Source: Nifty soars to record high on positive global, domestic cues