The domestic equity Stock Market saw healthy gains on Friday, December 1, with the benchmark Nifty 50 reaching a new intraday high of 20,291.55 on all-round buying after India’s Q2 GDP numbers exceeded expectations.
The Nifty 50 ended 135 points, or 0.67 percent, higher at 20,267.90.
During the session, the midcap and smallcap indices also set new highs. The Nifty Midcap 100 index reached a new high of 43,469.30, while the Nifty Smallcap 100 index reached a new high of 14,305.10.
The Nifty Midcap 100 index rose 1.10 percent to 43,382.40, while the Nifty Smallcap 100 index rose 0.48 percent to 14,239.30.
The Sensex closed the day at 67,481.19, a gain of 493 points, or 0.74 percent. The Sensex remained 446 points below its all-time high of 67,927.23 set on September 15 of this year.
After reaching a new record high of 34,631.35 during the day, the BSE Midcap index closed 0.96 percent higher at 34,586.76. The BSE Smallcap index finished 0.48 percent higher at 40,565.96 after reaching a session high of 40,718.81.
The overall Stock Market capitalisation (m-cap) of firms listed on the BSE increased to nearly 337.7 lakh crore from nearly 335.6 lakh crore the previous session, making investors richer by approximately 2.1 lakh crore in a single session.
The following are five important factors that could have boosted the Stock Market:
1. High GDP figures
India’s Q2 GDP increased by 7.6 percent, far exceeding expectations. A Mint poll of 18 economists predicted that GDP growth would be around 6.8 percent in the third quarter.
According to Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, the sharp increase in India’s second-quarter GDP figure demonstrates that the country’s economic growth has been driven by robust domestic demand.
“Demand-driven growth further suggests that India’s economy will expand going forward, even in the event that the world economy contracts. Because of this, the Indian economy will draw in foreign investment as well and separate itself from its peers in the emerging market (EM) space, according to Sheth. According to Vinod Nair, Head of Research at Geojit Financial Services, “the capital goods and infra stocks underperformed due to the government’s capex and the improvement in manufacturing activity.”
2. The market anticipates political continuity
Prior to the General Election of 2024, political stability was suggested by exit surveys following the five state elections. The market seems to have calmed as a result.
“A resounding victory for the BJP will strengthen the general consensus that the party is well-positioned for the general elections in 2024. As policy continuity will be seen as a positive growth shock in the medium term, this will probably add another leg to the market rally, according to analysts at brokerage firm Emkay Global Securities.
3. The part played by individual investors
Experts noted that a significant influx of retail investors is currently occurring in the domestic market, which is helping the market. According to BSE data, there are now more than 3 crore registered investors at the BSE.
Particularly when foreign investors were pulling out of Indian stocks, domestic retail investors have been instrumental in supporting the domestic market. The market held up well in spite of overseas sell-offs, partly because of the significant support these individual investors offered.
4. Hopes for an end to rate increases
The mood of the market right now points to an expected US interest rate peak, which could result in rate cuts in May or June of the following year. This change in expectations may have something to do with foreign portfolio investors’ (FPIs’) recent surge in the Indian market.
FPIs have started purchasing Indian stocks again after two months of selling. FPI purchases of ₹9,001 crore worth of Indian stocks were made in November, according to NSDL data.
5. A technical consideration
Prashanth Tapse, Senior VP at Mehta Equities, states that the short-term technical picture for the Nifty remains bullish, with resistance at 20,500–20,751 and support at 20,089–19,909.
Senior Technical analyst Rupak De of LKP Securities noted that as long as the bulls are in charge, the Nifty will continue to rise. It appears likely that there will be a consolidation breakout on the weekly time frame, opening the door for an additional index rally.
De continued by saying that the weekly RSI’s bullish crossover indicates that sentiment is still positive.
“At 20,200, support is stable at the lower end. As long as the Nifty stays above this level, any declines could be viewed as opportunities for purchases. Resistance is expected around 20,450–20,500 on the higher end, according to De.
