New Delhi: Stock indices across India have continued to ascend, achieving new milestones for the fifth consecutive day on Thursday. The Sensex, in particular, approached a significant milestone of 86,000 points at one point during the session.
By the close of trading, the Sensex had settled at 85,836.12 points, marking an increase of 666.25 points or 0.78 per cent, whereas the Nifty closed at 26,186.00 points, reflecting a rise of 181.85 points or 0.70 per cent. Within the sectoral indices, the Nifty auto and Nifty metal sectors emerged as the leaders, with gains of 2.26 per cent and 2.13 per cent, respectively.
The decision by the US Federal Reserve's monetary policy committee to loosen interest rates by a steep 50 basis points has provided additional support to Indian equities. This move in the US monetary policy typically encourages capital flight towards markets offering higher policy rates. Consequently, a more pronounced rate reduction in the US increases the likelihood of capital shifting to alternative investment destinations, including India.
Furthermore, the sustained purchases by foreign portfolio investors (FPIs) have also contributed to the stability of the stock indices. FPIs have increased their investments in India, anticipating improved returns on their investments due to the differential in interest rates.
Data from NSDL reveals that FPIs have accumulated a total of Rs 49,459 worth of Indian stocks in September, marking their fourth consecutive month as net buyers.
"There are currently no immediate catalysts that could precipitate a significant market downturn or a sharp market rally. Positive market movements may lead to selling by FPIs, who are likely to allocate further funds to China and Hong Kong, given these markets are perceived as undervalued and are experiencing an upward trend. However, it is unlikely that FII selling will significantly impact the market, as the substantial domestic liquidity capacity can readily absorb such sales," stated VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"Given the absence of valuation reassurance in the market at present, with the mid and smallcap segments appearing overvalued, investors should prioritize safety and favor large-cap stocks. The Bank Nifty sector holds considerable potential for further growth, and there is a degree of valuation comfort within this sector," Vijayakumar concluded.
