Indian Stock Market Achieves Record Highs Despite Global Volatility.

Indian Stock Market Achieves Record Highs Despite Global Volatility.

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On Thursday, India’s benchmark stock indices, the Sensex and the Nifty, reached record highs, showcasing the resilience of the Indian stock market. The Sensex surged to a new peak of 67,771.05, surpassing its previous high of 67,619.17 recorded in July. Similarly, the Nifty reached a record level of 20,167.65 before closing at 20,103.10, marking a 0.16% increase. This remarkable performance occurred despite the usual volatility associated with the expiry day of futures and options contracts.

Sustained Upswing Despite Global Factors

The market’s upward trajectory remained intact despite weak global cues. Siddhartha Khemka, the Head of Retail Research at Motilal Oswal Financial Services Ltd, attributed these gains to positive Wholesale Price Index (WPI) data. The WPI inflation remained negative for the fifth consecutive month, registering at -0.52% in August, which has been supportive for the markets. Strong domestic macroeconomic data is expected to keep the market sentiment positive.

Outperformance in September

India’s stock market has outperformed many large global markets in September, with the Sensex and Nifty posting gains of 4.15% and 4.37%, respectively. This impressive performance was primarily driven by public sector banks, although private banks and other financial institutions also experienced reasonable gains. Contributing to the market’s rise were sectors such as IT, metals, realty, and infrastructure.

Broad-Based Gains and Positive Sentiment

Thursday’s market gains were broad-based, with PSU banks, metals, real estate, oil and gas, and auto stocks leading the charge. The broader market also demonstrated strength, with the Nifty Mid-cap 100 and Small-cap 100 indices recording gains of 1%. Analysts noted that rotational buying across sectors has been instrumental in the gradual increase of the index, despite mixed global cues

.Foreign Investment and Concerns

Foreign portfolio investors, who had been net sellers in September until Wednesday, reversed their stance on Thursday and became net buyers. However, their investments remain influenced by currency fluctuations and movements in US bond yields. Rising crude oil prices and global uncertainties have also sparked concerns among investors. Some analysts anticipate that the market may enter a consolidation phase due to concerns related to valuations and the inflation trajectory driven by increasing oil prices.

Global Factors and Potential Volatility

The market, which reached a new high on Thursday, is expected to face bouts of volatility as global cues remain mixed. Higher-than-expected US inflation and anticipation of hawkish European Central Bank (ECB) policy meetings have impacted investor sentiment.

Additionally, investors will closely monitor US Producer Price Index (PPI) and retail sales data, which will play a pivotal role in the US Federal Reserve’s rate decision next week.In summary, India’s stock market has demonstrated remarkable resilience and achieved new highs in September, despite global uncertainties. While concerns over valuation and inflation may lead to a consolidation phase, domestic macroeconomic data and rotational buying across sectors are expected to keep market sentiment positive in the near term.