Stock market today: The Indian stock market experienced strong buying interest on Thursday, May 23, leading the benchmarks, the Sensex and the Nifty 50, to their fresh record high levels.
The Nifty 50 opened at 22,614.10 against its previous close of 22,597.80 and jumped 1.8 per cent to hit its fresh record high of 22,993.60 during the session. The index closed 370 points, or 1.64 per cent, higher at 22,967.65 with as many as 44 stocks in the green.
The Sensex opened at 74,253.53 against its previous close of 74,221.06 and also jumped 1.7 per cent to hit its fresh record high of 75,499.91 during the session. The index closed 1197 points, or 1.61 per cent, higher at 75,418.04 with 27 stocks in the green.
The market witnessed across-the-board buying as the BSE Midcap and Smallcap indices also hit their fresh record highs of 43,442.47 and 48,229.33 respectively, during the session.
Also Read: Market Close Highlights : Markets close at all-time highs; Sensex up at 75,420, Nifty at 22,970
The overall market capitalisation of the firms listed on BSE rose to nearly ₹420 lakh crore from ₹416 lakh crore in the previous session, making investors richer by about ₹4 lakh crore in a day.
As many as 222 stocks, including Bharti Airtel, Mahindra and Mahindra, Ashok Leyland, Eicher Motors, Tata Steel, Adani Enterprises and Adani Ports, hit their fresh 52-week highs in intraday trade on BSE.
Experts pointed out the following five key factors that boosted the Indian stock market today:
1. Easing election-related jitters
Ebbing election-related jitters are keeping the market in the green zone. As the market expects political stability after the Lok Sabha elections, investors are focussing on buying quality stocks, as the medium—to long-term outlook of the market remains positive.
“The Nifty hitting a new record is the market’s message of political stability after the elections. The rally is healthy since it is led by fairly valued large-caps,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
According to Bernstein, the Indian stock market may see a short-term rally either leading into the Lok Sabha elections or the week after the results, potentially making the Nifty 50 breach the 23,000 mark. However, this short-term rally may be followed by a profit booking.
2. Macro factor
The market sentiment appears to have got a boost after the Reserve Bank of India (RBI) announced a record ₹2.11 lakh crore dividend to the Centre for FY24. This is positive for the economy as it will help the government meet its fiscal deficit target for FY25.
Also Read: RBI’s record dividend of ₹2.11 trillion to help Centre’s FY25 fiscal deficit, lower bond yields
“The biggest positive for the market is the record ₹2.11 lakh crores dividend from the RBI to the government, which will give an additional 0.3 per cent of GDP fiscal room for the government. This means the government can reduce its fiscal deficit and step up infrastructure spending,” said Vijayakumar.
“Today, there was enthusiasm in the equity market after the RBI approved a ₹2.1 lakh crore dividend to the government. This indicates a better fiscal position and softer bond yields going forward. As a result of this positive move, we are seeing some short covering in the market,” said Neeraj Chadawar, Head – Fundamental and Quantitative Research at Axis Securities.
The decline in crude oil prices is another boost for market sentiment, especially for India, one of the world’s largest oil importers. Lower crude oil prices help control inflation and positively impact the nation’s fiscal health.
Also Read: Emkay projects Brent oil price range at $83 to $92 per barrel in short term
3. Gains in banking heavyweights
Shares of banking heavyweights including HDFC Bank, ICICI Bank and Axis Bank emerged among the top contributors to the gains in the Sensex and the Nifty 50 index following a significant fall in India’s 10-year bond yields after the RBI’s mega dividend payout to the government.
“Bond yields have declined sharply, reflecting lower government borrowing. The decline in bond yields is positive for banking stocks,” said Vijayakumar.
The Nifty Bank index jumped 2.06 per cent to close at 48,768.60 with all 12 stocks in the green.
4. Strong buying by domestic investors
Domestic institutional investors (DIIs) have been strongly buying in the Indian market even as foreign institutional investors have been offloading Indian equities this month. Data show that DIIs bought Indian stocks worth ₹38,331 crore in the cash segment until May 22. On the other hand, FIIs sold stocks worth ₹38,186 crore in cash this month so far.
5. Technical factors
Soni Patnaik, assistant vice president of equity derivatives research at JM Financial Services, pointed out that the Nifty 50 crossed crucial resistance of 22,800+ levels at the weekly expiry today and it can head towards the 23,000 mark by the month-end expiry from current levels.
“Aggressive put options writing can be seen from the base of 22,500 PE to all the way till 22,800 PE, forming a strong support base at 22,600/22,700 levels now,” said Patnaik.
According to Ajit Mishra, SVP of research at Religare Broking, the Nifty 50 eyes the 23,100-23,400 zone, with the 22,600-22,800 zone expected to provide support in case of any pullback.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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