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The Indian stock market experienced a significant surge on Thursday, propelled by gains in the auto and banking sectors, fueled by positive developments in the global markets following China's recent stimulus measures. The benchmark Sensex, a key indicator of the Bombay Stock Exchange (BSE), soared by 666 points, closing at a new high of 85,836.12 on the monthly derivatives expiry day. This represents a gain of 0.78 percent.
The Nifty 50 index, another prominent stock market index, also registered a notable increase, ending the day at 26,216, up 212 points or 0.8 percent. The total market capitalization of BSE-listed stocks experienced a significant rise of Rs 1.9 trillion, bringing the total value to Rs 477 trillion. The Nifty consistently demonstrated positive performance throughout the month, experiencing gains on all but six trading sessions.
A significant contributor to the market's upward trend was the rally in major auto companies, spurred by reports indicating that the state of Karnataka would implement incentives for clean mobility, including a substantial tax reduction for hybrid cars. The news highlights Karnataka's commitment to promoting sustainable transportation solutions, which could potentially influence other states to follow suit.
Mahindra & Mahindra, Maruti, and Tata Motors were among the top performers in the Sensex, contributing significantly to the index's gains. Mahindra & Mahindra witnessed a 2.9 percent increase, Maruti gained 4.8 percent, and Tata Motors surged by 3.08 percent. These gains are directly linked to the positive sentiment surrounding hybrid cars and the potential benefits they stand to receive under Karnataka's new policy.
The influx of foreign and domestic investment further fueled the market's upward trajectory. Foreign portfolio investors (FPIs) acted as net buyers, contributing Rs 630 crore, while domestic institutions injected Rs 2,405 crore into the market. This indicates a strong confidence in the Indian economy and the potential for growth in the foreseeable future.
Karnataka's ambitious plan to reduce road tax and registration charges for hybrid cars priced below Rs 25 lakh from the current 18 percent to 13 percent is set to make the state the second in India, after Uttar Pradesh, to offer tax breaks for such vehicles. This policy is expected to make hybrid cars more affordable and appealing to consumers, further boosting the sales of these fuel-efficient vehicles.
The bullish sentiment in the global markets, triggered by China's pledge to ramp up efforts to stimulate economic growth, played a significant role in driving the Indian stock market's performance. Following a meeting of the 24-man Politburo, chaired by President Xi Jinping, reports emerged suggesting that the Chinese leadership would prioritize fiscal spending and take steps to stabilize the country's property sector. These measures aim to revitalize economic activity and address concerns about the slowdown in growth.
Adding to the positive sentiment, Chinese authorities announced one-time cash handouts to residents facing economic hardships, coupled with enhanced benefits for unemployed individuals. These measures underscore China's commitment to providing social support during challenging economic times and are expected to have a positive impact on consumer spending and overall economic activity.
Metal stocks also experienced a significant boost, with the BSE Metal index recording a surge of over 2 percent. This upward movement is attributed to the positive news emanating from China, where efforts to revive the economy are gaining momentum. The resurgence of demand in China, a major consumer of commodities, is likely to benefit metal producers globally, including those in India.
The recent decline in interest rates by the US Federal Reserve (Fed) last week has instilled a sense of optimism in the market. This move has sparked hopes of a broader easing of monetary policy measures worldwide, leading to an increase in investors' risk appetite. The global easing of monetary policy is expected to encourage investment and boost economic activity across the globe.
Analysts remain optimistic about the future trajectory of the Indian stock market, highlighting the strong fundamentals and the supportive global environment. The positive signals from policymakers across the globe suggest a continuation of the upward trend in equities in the near to medium term. The combination of fiscal and monetary measures aimed at reviving economic growth is seen as a key driver of this optimistic outlook.
The Nifty's impressive run, reaching record highs for five consecutive trading sessions, is a clear indication of the prevailing bullish sentiment in the market. This trend is expected to continue, with the Nifty potentially reaching 26,500 in the coming weeks. Rate-sensitive sectors such as banking, auto, real estate, and financials are expected to continue performing well. Additionally, investors are encouraged to consider selectively investing in stocks from the metal and energy sectors, which are also expected to benefit from the current market conditions.
Source: Metals, auto stocks drive indices to fresh highs; Sensex jumps 666 pts