India’s Nifty 50 and Sensex indexes, which represent the stock market, experienced a surge and reached new record highs on Wednesday. This upward momentum was primarily driven by the increase in certain Adani group stocks and the strong performance of financial companies, supported by consistent foreign investment, stable economic indicators, and steady corporate profits.
The Nifty 50 index climbed by as much as 1.03%, reaching an all-time high of 19,011.25. Despite facing resistance last week due to cautious statements from the central bank, it managed to break through the previous level.
Both the Nifty 50 and the S&P BSE Sensex achieved fresh closing highs, with the Nifty closing 0.82% higher at 18,972.10 and the Sensex closing 0.79% higher at 63,915.42.
While the Sensex had already reached a record high the previous week, midcap and smallcap stocks hovered near their respective record and 52-week highs.
Out of the 13 major sectoral indexes, 12 experienced gains, with financials rising by 0.54%.
Adani Enterprises emerged as the top gainer in the Nifty index, surging over 5% following reports of GQG Partners and other investors purchasing an additional stake worth approximately $1 billion in Adani group companies.
Notably, HDFC and HDFC Bank, prominent constituents of the indexes, saw their shares continue to rise as they announced plans to finalize their merger on July 1.
Market experts highlighted that investors were increasingly optimistic about risk assets, encouraged by the recent decline in inflation and the anticipation that the current cycle of interest rate hikes would soon come to an end. They also attributed the ongoing rally to the return of foreign investors and consistent corporate earnings.
Foreign portfolio investors have purchased equities worth 859.83 billion rupees ($10.49 billion) during the fiscal year 2024, following net selling of 1.4 trillion rupees and 376.32 billion rupees during the fiscal years 2022 and 2023, respectively.
However, compared to global counterparts, the Indian benchmarks were considered relatively expensive according to Refinitiv data. Analysts cautioned that the market could undergo a period of consolidation since valuations remained high.
Although the Nifty 50’s price-to-earnings ratio, which measures the index’s valuation, remained below its long-term average, experts attributed this skew to the extraordinary rally witnessed in 2020 and 2021 following the impact of the Covid-19 pandemic.
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