Market Soars to New Heights on Renewed Optimism
Indian equity benchmarks scaled a significant peak on Thursday, with the Nifty closing at a 13-month high, powered by a surge in index heavyweights and growing optimism surrounding a potential US-trade deal. The Nifty pushed past the 26,200 mark, closing at 26,192.15, a level not seen since its intraday lifetime peak of 26,277.35 on 27 September last year.
Heavyweights and FPI Activity Drive the Surge
The rally was largely driven by strong performances from key players. HDFC Bank, which holds a 12.78% weight in the Nifty, and Reliance Industries, with an 8.53% weight, were the primary contributors. Reliance ended the session just 10 paise short of its fresh 52-week high. Exchange data revealed that the upmove was supported by cash buying as well as derivatives short-covering.
After being net sellers for three consecutive months since July, Foreign Portfolio Investors (FPIs) have made a notable return. They turned net buyers in October, scooping up ₹10,167.46 crore of equities, followed by another ₹500.70 crore so far in November. On Thursday, FPIs net bought a provisional ₹283.65 crore in shares and significantly cut their net bearish bets in index futures.
The renewed confidence was also visible in the options market, where FPIs increased their bullish call options on the Nifty and Bank Nifty to 56,530 contracts from 22,531 the previous day.
Analysts Weigh In: Cautious Optimism and Future Projections
While the mood is buoyant, experts advise a measured approach. Saurabh Mukherjea of Marcellus Investment Managers expressed cautious optimism, stating that the upcoming December earnings season will be the real test. He warned that if corporate earnings fail to reflect the benefits of recent GST cuts, the positive sentiment could sour quickly.
However, not all are hedging their bets. Kkunal Parar of Choice Equity Broking believes the Nifty may have more steam left. He indicated that a decisive move past the intraday peak of 26,277 could signal stronger momentum, potentially opening the path for a run-up to 26,500.
According to a report from brokerage ACMIIL, the Nifty has rallied 13% or 3,026 points in the current fiscal year. The biggest contributors to this rally were Reliance (357 points), Bharti Airtel (215 points), Mahindra and Mahindra (172), State Bank of India (155), and Eternal (130).
Looking at global markets, the Nifty's nearly 11% gain since the year began still trails several major indices, including Hong Kong's Hang Seng and Japan's Nikkei. However, with India's relative valuation becoming more reasonable compared to other emerging markets, firms like CLSA expect India to start participating more actively in the ongoing global equity bull run.
