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Led by Reliance Industries shares, stock markets on Wednesday rallied to a new peak on the back of heavy buying support by domestic institutional investors (DIIs). The benchmark Sensex hit a record high of 78,674.25, registering a gain of 620 points or 0.80 per cent. The NSE Nifty Index jumped by 147 points, or 0.62 per cent, to 23,868.80 in the sustained buying euphoria despite withdrawals by foreign institutional investors (FIIs).
On Wednesday, DIIs, led by mutual funds, bought stocks worth Rs 5,103 crore thereby boosting the bull rally. However, FIIs pulled out Rs 3,535 crore from the cash market during the day, according to exchange data.
DIIs have bought stocks worth Rs 30,000 crore in June so far. FIIs sold stocks worth Rs 2,062 crore during the month. After showing volatile movements, the Sensex has gained over 2,000 points since June 3 this year, aided largely by domestic funds.
Net inflows into equity mutual funds grew 83 per cent month-on-month to touch a record high of Rs 34,697 crore in May, as compared to Rs 18,917.09 crore in April, latest data from the Association of Mutual Funds in India (AMFI) showed. “This money is now being deployed in the stock market, taking the indices to new peak,” said a market source.
RIL shares rallied by 4.09 per cent to Rs 3,027.47 on sustained buying support. RIL market capitalisation rose to Rs 20.48 lakh crore during the session.
Domestic institutional investors have bought stocks worth Rs 30,000 crore in June so far. Foreign institutional investors sold stocks worth Rs 2,062 crore during the month. Investors are largely bullish and are betting on the next month’s Budget, experts say.
“The domestic market hit a new peak, bolstered by a rally in large-cap stocks, where the valuation is relatively fair. In contrast, mid- and small-cap stocks saw profit-taking due to valuation concerns,” said Vinod Nair, Head of Research, Geojit Financial Services. Currently, financials and consumption stocks are catching up, driven by improved balance sheets, strong GDP growth forecast and softening inflation. “Global market sentiments reflected similar trends, with a consensus on imminent rate cuts,” Nair said.
Analysts said investors are mounting bullish bets ahead of the next month’s Budget, which once again triggered a major rally and lifted both benchmark indices to fresh all-time highs. “Market participants are hoping for a reform-oriented budget from the government that would translate into buying action in stocks supportive of long-term economic growth,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Telecom stocks saw significant gains on expectations of tariff hikes, while cement stocks witnessed renewed buying interest today, driven by expectation of higher government spending on road construction. “The sentiment for banking and financials has improved after lower current account deficit numbers released yesterday. Overall optimism surrounding the Union Budget, increasing FII inflows and robust domestic economic data contributed towards the positive movement in the market. We expect the ongoing uptrend to continue further,” said Siddhartha Khemka, Senior Group VP, Head – Research, Motilal Oswal Financial Services Ltd.
