The market closed at record highs on Wednesday, powered by a surge in banking and consumer durables stocks. While the Sensex closed 221 points (0.59 per cent) higher at 37,887, the Nifty gained 60 points to close at the 11,450 level. Intra-day, the Sensex hit an all-time high of 37,931 while Nifty touched 11,459 for the first time. Market heavyweight Reliance Industries added 35 points (2.85 per cent) to close at 1217. The stock touched a fresh 52-week high of 1222. Other Sensex gainers were ONGC (2.87 per cent), ICICI Bank (1.63 per cent) and SBI (1.53 per cent). Here are the six reasons the stock market jumped to a record high.
Stellar corporate earnings
The Q1 earnings show by India Inc has been led by a better performance by firms in FMCG and information technology sectors, which have logged double digit growth in net sales and net profit. Earnings of banking and finance companies too logged double-digit growth, which have improved sentiment on the street.
Banking stocks rally
Banking stocks led the charge with the Bank Nifty closing above 28,000 level for first time. BSE bankex too rose 245 points or 0.78% to close at 31587 level.
The rupee on Wednesday opened 2 paise higher at 68.66 against the US dollar. Rupee snapped its three-day losing streak today and climbed primarily due to weakness in the dollar against major currencies. Forex market largely withstood the initial discomfort and broad-based dollar weakness helped the rupee to reverse its bearish undertone, according to a PTI report. It finally closed higher by 6 paise at 68.62 level.
Normal monsoon forecast
The IMD last week said monsoon rains would be normal in August and September, which bouyed market sentiment. In the second Long Range Forecast for rainfall during the second half of the Southwest Monsoon season, the IMD said the scenario realised till the end of July suggests that distribution of rainfall was very good across the country except Bihar, Jharkhand and north-eastern states. The favourable distribution of rainfall was expected to continue for the next two months, it said, raising hopes for agricultural operations during the kharif season.
FIIs withdrawal slows down
Domestic institutional investors (DIIs) played a key role in setting record rally for indices. DIIs poured Rs 3,845 crore into the Indian market in July. FIIs who have been net sellers in Indian equities since April 2018 sold equities worth just Rs 2,768.75 crore in July. The amount is far lower than Rs 9,620.56 crore, Rs 12,359.71 crore and Rs 10,249.17 crore withdrawn in April, May and June this year, respectively. The reduction in FII selling in Indian market signals the growing faith of these investors in Indian securities. The constant FII inflows into the market boosted sentiment on the street.
RIL stock play
Market heavyweight Reliance Industries added 2.85% or 35 points to the rally and closed at 1217 level. The stock touched a fresh 52-week high of 1,222 level gaining over 3 per cent intra-day.