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The Indian stock market witnessed a remarkable week, outperforming global counterparts and achieving significant gains across various indices. The Nifty and Sensex, the benchmark indices, both registered substantial growth, marking their best weekly performance in several years. This surge in the market can be attributed to a combination of factors, including positive domestic sentiment, a resurgence of foreign portfolio investment (FPI), and a broad-based rally across various sectors. The Sensex climbed 557.45 points, equivalent to a 0.73% increase, to close at 76,905.51, while the Nifty rose by 159.75 points, a 0.69% gain, ending the day at 23,350.40. Both indices recorded gains for the fifth consecutive session, signaling a strong and sustained upward trend. The Nifty logged its best weekly return (4.26%) in four years, a testament to the robustness of the Indian equity market. Similarly, the Sensex posted its best weekly return (4.17%) since July 22, 2022, highlighting the significant momentum gained during the week. The broader indices, BSE Midcap and BSE Smallcap, also experienced substantial growth, with gains of 1.14% and 2.05%, respectively, on Friday. The BSE Midcap recorded its best weekly return (7.09%) in four years, while the BSE Smallcap posted its best weekly return (7.87%) in five years, underscoring the widespread participation and positive sentiment across the market capitalization spectrum. The surge in the Indian stock market reflects a broader trend of economic optimism and investor confidence in the country's growth prospects. Several factors have contributed to this positive outlook, including strong macroeconomic fundamentals, government policies aimed at promoting economic growth, and a resilient corporate sector. The Indian economy has demonstrated strong resilience in the face of global economic headwinds, with robust growth rates and a stable macroeconomic environment. The government's focus on infrastructure development, investment promotion, and regulatory reforms has further boosted investor confidence and attracted foreign capital.
One of the key drivers of the recent market rally has been the return of foreign portfolio investors (FPIs). After a period of net selling, FPIs have once again turned buyers of Indian equities, injecting significant liquidity into the market. On Friday, FPIs bought shares worth Rs 7,470.36 crore, the highest in a month, marking their second consecutive session of net buying. This reversal in FPI flows indicates a renewed interest in Indian equities among foreign investors, driven by factors such as attractive valuations, improving corporate earnings, and positive economic prospects. Prashanth Tapse, senior V-P (research) at Mehta Equities, noted that investors shrugged off negative global market sentiment as foreign institutional investors made a steady comeback to local equities this week. This suggests that the Indian market has become increasingly decoupled from global trends, with domestic factors playing a more significant role in driving market performance. The recent market correction has also made stocks attractive across several sectors, including broader mid- and small-cap indices. This has led to increased investor participation and short covering, further fueling the market rally. The Sensex even breached the 77,000 mark in intra-day trades, a significant milestone that reflects the strong bullish sentiment prevailing in the market. The broad-based rally has resulted in a substantial increase in investors’ wealth. On Friday alone, investors’ wealth soared by Rs 4.69 lakh crore, and during the week, it increased by a staggering Rs 22.12 lakh crore. This wealth creation underscores the positive impact of the stock market rally on household savings and investment portfolios. However, while FPIs were net buyers, domestic institutional investors (DIIs) sold shares worth Rs 3,202.26 crore on Friday, following a similar sell-off on Thursday. This suggests that DIIs may be taking profits after the recent market rally, while FPIs are still accumulating positions. This divergence in investment strategies highlights the different perspectives and objectives of these two major investor groups.
The sectoral performance during the week was also noteworthy. All sectoral indices on the BSE and the NSE ended in the green on a weekly basis, indicating a broad-based rally across various sectors of the economy. Industrials, realty, healthcare, capital goods, services, and utilities were the top sectoral gainers, rising over 7% each. This demonstrates the strength and resilience of these sectors, which are benefiting from factors such as increased infrastructure spending, rising consumer demand, and positive policy initiatives. Within the Sensex and the Nifty, the majority of stocks delivered positive returns during the week. Barring Tech Mahindra (-2.06%) and ITC (-1.47%), all stocks in the indices experienced gains. Zomato, ICICI Bank, Tata Motors, L&T, and Adani Ports were the top Sensex gainers, rising up to 12.98% during the week. These companies represent diverse sectors of the economy, reflecting the broad-based nature of the market rally. ICICI Bank and HDFC Bank, two of the largest private sector banks in India, contributed significantly to the Sensex’s 3,076-point rally during the week. ICICI Bank contributed 555 points, while HDFC Bank contributed 419 points, accounting for nearly 1,000 points of the total gain. This highlights the importance of the financial sector in driving market performance. Vinod Nair, head of research at Geojit Financial Services, commented that the domestic market concluded the week with a consistent recovery. He attributed this recovery to the anticipated reduction in risk-free rates and the correction in the dollar index, which are facilitating fund flows back to emerging markets. This suggests that the Indian market is benefiting from a favorable global macroeconomic environment and a shift in investor sentiment towards emerging market assets. In conclusion, the Indian stock market witnessed a stellar week, with benchmark indices achieving their best weekly returns in several years. The market rally was driven by a combination of factors, including positive domestic sentiment, a resurgence of foreign portfolio investment, and a broad-based rally across various sectors. The surge in the market reflects the underlying strength and resilience of the Indian economy, as well as the growing confidence of investors in the country's growth prospects.