Indian stock markets hit a new lifetime high, with the benchmark Sensex gaining over 200 points to strike the new level of 32,000 points while the broader Nifty 50 advanced more than 50 points to hit a new all-time high of 9,885.65 points. BSE Sensex opened up 92 points at 31,896.23 points and very quickly jumped more than 200 points in wee minutes of trading to cross the phenomenal level of 32,000, at 9:20 am it marked 32,003.43 points.
Here are the five reasons which are fuelling the Dalal Street rally:
Lower than expected Inflation rate
Retail inflation hit a “historically low” level of 1.54% in June on a dip in food items like vegetables, pulses and milk products, which may prompt the Reserve Bank to go in for a rate cut next month. “The number of 1.54% is historically low and reflects the firm and ongoing consolidation of macroeconomic stability,” Chief Economic Adviser Arvind Subramanian told reporters. “The last time we saw such inflation — according to slightly different CPI (IW) — was in 1999 and before that in August 1978,” he added. There are now renewed hopes of a rate cut by the Reserve Bank at its policy meet next month after retail inflation hit a low level of 1.54% in June and industrial output growth slumped to 1.7% in May.
Firm Global Cues
Yesterday, the Dow Jones Industrial Average (DJIA), NYSE’s benchmark index rose to a record high on close while US stocks kept their upward momentum on Wednesday following Federal Reserve Chair Janet Yellen’s congressional testimony to gradually raise interest rates. DJIA hit a record closing high rising over 100 points to hit 21,532.14 points. The tech index of United States, Nasdaq Composite also added over 67 points to close at 6,261.17 points.
Strengthening of Rupee
The rupee strengthened 15 paise to 64.39 against the dollar today, backed up by record-shattering stocks, as foreign capital stayed on an upward trajectory. The level of dollar selling by exporters and banks intensified, too. A muted show by the dollar against other currencies overseas added momentum to the rupee. The dollar slipped against its peers on Thursday after Federal Reserve Chair Janet Yellen did not sound as hawkish as many had anticipated.
Optimism about the corporate earnings
Indian markets are now reflecting the buoyant mood ahead of the corporate earnings. Domestic markets are rising on the back of positive expectations from the first quarter earnings of the FY 2017-2018. A lot of other factors seem to have come into the play: Good rainfall and smoother implementation of the historic tax reform, GST (goods and service tax) with no more than expected troubles.
FII Influx and Blue-chips gains
Foreign portfolio investors (FPIs) bought shares worth a net Rs 182.05 crore while domestic institutional investors (DIIs) net purchased Rs 335.75 crore yesterday, as per provisional data.
Shares of Reliance Industries rose by over 1% to hit a fresh nine-year high today after its subsidiary Reliance Jio unveiled new tariff plans. The stock jumped 1.02% to settle at Rs 1,510.50 on BSE. During the day, it gained 1.95% to Rs 1,524.50 — its multi-year high level. The company’s market valuation rose to Rs 5,018.01 crore to Rs 4,91,149.01 crore, the only Indian company above 5,000 crore market capitalisation.