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Journalism of Courage
A MONTH AFTER the Lok Sabha election results were declared, the BSE’s 30-share Sensex crossed the 80,000 mark for the first time on Wednesday during intraday trades. The index took nearly seven months or 139 sessions to add 10,000 points, after it surpassed the 70,000 level on December 11, 2023, as a host of factors like expectations of continuity in government policies, higher economic growth forecast and heavy domestic fund buying boosted the bullish fervour.
The Sensex jumped 545.35 points, or 0.69 per cent, to end at 79,986.8 on Wednesday. It hit a new peak of 80,074 during intra-day trades, rising 632.85 points. The broader Nifty 50 added 162.65 points, or 0.67 per cent, to close at an all-time high of 24,286.5.
The rise in domestic indices on Wednesday was boosted by large caps, with financials taking centre stage. HDFC Bank’s shares rose on account of an increase in its weight in MSCI’s August review. According to Nuvama Alternative & Quantitative Research, HDFC Bank’s weight in the MSCI EM Index, which is currently around 3.8 per cent, is likely to jump to 7.2-7.5 per cent, potentially bringing in $3.2-4 billion inflows over six days. The rise in Reliance Industries shares and banking stocks also added to the sentiment.
“Sensex milestones are a journey and not a destination. Do remember that this journey is both forward as well as backward. NASDAQ went so backwards that it took 17 years to come back to the previous peak. Invest in the market as per your risk appetite, have a long-term horizon, significantly moderate your return expectations and follow the dharma of asset allocation,” said Nilesh Shah, Managing Director, Kotak Mahindra AMC.
Launched in January 1986, the Sensex crossed its first 10,000 level during intraday deals on February 6, 2006. The index crossed the 20,000 level on November 5, 2007, and the 40,000-mark on July 5, 2019, during intraday trades. It took five years for the Sensex to rise from 40,000 to 80,000.
In the last 10,000 points run up in the Sensex, realty, PSU, auto, power, capital goods and metal stocks contributed the most, while FMCG, banks and IT sector, though positive, underperformed, said Deepak Jasani, Head of Retail Research, HDFC Securities.
In the last seven months, while the Sensex has risen by 14.38 per cent, BSE 100, BSE Smallcap and BSE Midcap have jumped by 18.76 per cent, 29.1 per cent and 31.42 per cent, respectively. The excessive speculation in some small and mid-caps prompted market regulator Sebi to caution about the “froth” in the segment.
The bull run in Indian equities witnessed over the last few years has been driven by increased participation of retail investors, boosted by strong economic growth outlook and valuations. These investors are investing directly and also through the mutual fund route.
As per SEBI’s monthly data, at the end of April 2024, 3.6 crore demat accounts were registered with National Securities Depository Ltd (NSDL) and 11.8 crore with Central Depository Services (CDSL) (India). The number of mutual fund folios is also rising month after month.
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, the Association of Mutual Funds in India (AMFI) data showed. In May, the systematic investment plan’s (SIP) contribution touched an all-time high of Rs 20,904 crore.
