Why did the Sensex hit an all-time high today?

The BSE Sensex hit its lifetime high of 63,588.31 on Wednesday before closing at 62,523. The benchmark reached the milestone after a gap of nearly seven months. Meanwhile, the NSE Nifty rose 37 points to 18,853.70. But why is this happening? And what happens next? Let’s take a closer look: Why is this happening? Wednesday saw the indices scale new heights over buying in index majors HDFC twins and Reliance Industries. Positive trends in European markets also added to the momentum in domestic equities. Research analyst VLA. Ambala told India Today, “It is another record day in India’s stock market. As we had said yesterday, the price was getting ready for a new all-time high, and today Sensex has made a new all-time high of 63,588.31.” In the macro term, the BSE Sensex and NSE Nifty have been rising due to several factors including lower inflation and stronger projections of growth, as per India Today. According to The Times of India, growth has sped up in the March quarter at the same time that inflation has cooled.

Foreign Institutional Investors (FIIs) are another big reason for the upswing.

FIIs have poured in in Rs 738.12 billion in India this financial year, according to The Times of India. This after they were net sellers in the previous two fiscal years with a record outflow in FY2022 of Rs 1,400.10 billion. “Benchmark Indices touched new highs today on the back of the sustained increase in capital expenditure by the Government of India coupled with rising manufacturing PMI. Despite an increase in interest rates, we are witnessing rising credit demand and India Inc. today can boast of much better balance sheets than ever before. The return of FIIs to our markets since April has boosted sentiments even as domestic investors continue to repose confidence in Indian equities,” S Ranganathan, Head of Research at LKP Securities told Mint. According to Mint, mid and small cap funds have outperformed the benchmark. This shows confidence on the part of retail investors. The outlet quoted data as showing that the number of registered investors on BSE increased 24 per cent since last year. What happens next? Experts think there is more upside to come. Ambala added to India Today, “We are still in a bull run and the trend is very steep. Fundamentally strong and financially stable stocks are seeing an increase in their volumes.” The outlet quoted Gaurav Dua, senior vice president and head of capital market strategy at Sharekhan, as saying India’s economy is in a ‘multi-year upcycle’.

“While there are pockets of overvaluation, pockets of opportunity also exist in markets,” said Dua.

“The indexes may be at or near record highs, but the valuations are not, thanks to healthy earnings growth over the past 20 months.” “It is important to understand that this is a global rally with most markets - US, Euro Zone, Japan, South Korea, Taiwan - hovering around 52-week highs. India is near new record highs,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told Mint. “Globally markets are bullish even when global growth is sluggish. The reason for this bullish trend is that the US recession, which markets had discounted last year, didn’t happen and there are indications that the US might avoid a recession. So, markets are correcting the wrong discounting of last year,” Vijayakumar added. They also advise investors to not make any sudden moves. “I must say just wait and watch for some time. Right now, I do not see any reason to sell the price except that we are near to an all-time high, so hold it until there is no signal of profit booking,” Ambala added.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Firstpost

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