Continuing the ongoing exuberance, equities had yet another stellar session on Monday with benchmark indices and several sectoral indices hitting fresh lifetime high levels. The optimism was driven by positive cues from the global markets and hopes of strong corporate earnings growth in India, market observers said.
Sensex and Nifty gained 0.7% each to end the session at a record high closing levels of 74742.50 points and 22666.30 points, respectively. Intraday, the Sensex hit a high of 74869.30 points, while the Nifty 50 touched 22697.30 points for the first time.
The stellar gains helped the market capitalization of BSE-listed companies top Rs 400 trillion for the first time ever on Monday, as investor wealth rose by Rs 1.58 trillion in a single day.
The provisional data of banks for Jan-Mar quarter and automobile sales numbers indicate that strong earnings growth is likely to continue for banking/NBFCs and automobile companies, said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities. Agrawal said the prospects of strong domestic GDP growth coupled with strong trends in macroeconomic data like GST collection is further driving the momentum.
Rightly so, the top three gainers on the benchmark Nifty 50 index on Monday were automobile companies Eicher Motors, Mahindra & Mahindra, and Maruti Suzuki India as they rose 3-4%. Shares of heavyweight stock Reliance Industries and financial services companies were among the other top gainers in the market.
Out of 20 sectoral indices on BSE, 12 hit fresh record highs on a closing basis. These include S&P BSE Bankex, S&P BSE Financial Services, S&P BSE Auto, and S&P BSE metal.
“After a stellar FY24, Indian equity markets continue to march higher into new territory. Hopes of a favourable outcome from the ensuing general elections and the subsequent policy thrust are keeping sentiments upbeat,” sad Dhiraj Relli, MD & CEO at HDFC Securities.
The sentiments were also aided by several global positives in the global market in the form of strong labour market data in the US and decline in crude oil prices after recent surge.
The employment data released in the US over the weekend indicated strength in the world’s largest economy, raising hopes of a soft landing there. While this could push the timeline for the US Federal Reserve rate cuts, investors will closely watch the US core inflation data and the minutes of the Fed’s last policy meeting, both of which are scheduled for release later this week, analysts said.
Even as the gains were broad-based on Monday, Agrawal said investors should focus on sector/stock-specific developments rather than looking at broader indices as this is a stock picker’s market.
While largecaps saw strong gains, midcaps and smallcaps underperformed on Monday, unlike the trend seen over the last several sessions as well as FY24. The BSE Midcap index rose 0.3% to 40937.30 points, while the BSE Smallcap index ended the session 0.1% lower at 46003.86 points. While the midcap index still hit its record high levels, the smallcap index was over 800 points away from the feat.
“The broader market is slow in catching up and investors will do well to be cautious in entering small/midcaps without adequate due diligence,” Relli said.