The index soared to an intraday high of 20,008.15 before ending at a record 19,996.35, surpassing its previous high of 19,991.85 made 36 sessions earlier amid persistent institutional flows. The Sensex, however, ended 432 points below its record high of 67,619.17 hit on 20 July.
The success of the G20 summit, which envisaged the creation of an economic corridor linking Europe and the Middle East with India, drove up Adani Ports and Special Economic Zone Ltd and flagship Adani Enterprises Ltd by 7% and 4%, respectively, making them the top Nifty gainers.
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The Nifty completed its latest 1,000-point journey from 19,000 to 20,000 in 52 sessions. The gains have been built on solid foreign portfolio investor (FPI) and domestic institutional investor (DII) flows. FPIs have net invested ₹1.57 trillion so far this fiscal year (FY24), while DIIs, including mutual funds, have purchased shares worth ₹32,555 crore, with almost four-fifths invested in the last month alone.
The stocks which contributed the most to the Nifty’s rally from a closing of 16,988.40 on 20 March through Monday’s closing, the period covering the latest market rally, include Reliance Industries, ICICI Bank, Larsen & Toubro, ITC and Bajaj Finance.
The Nifty Midcap 150 Index hit a fresh record high of 15,513.75, while the Nifty Smallcap 250 also hit a new intraday high of 12,503.85, underscoring the retail direct and indirect investment through the mutual fund (MF) route.
A bullish Raamdeo Agrawal, the chairman and co-founder of Motilal Oswal Financial Services Ltd, described the market prospects as being “picture perfect”.
“India is emerging as a global powerhouse, as evident from the success of the G20 summit,” Agrawal said. “Although these things don’t transform into earnings growth immediately, they result in price-to-earnings (P/E) multiples increasing, though we expect FY24 earnings to be in the 15-17% range and possibly better.”
On the inherent risks accompanying the benchmark-beating rally in small- and mid-caps, Agrawal said these were passing phases and the tide could shift in favour of large caps if FPIs “step up” their buying as they prefer these stocks to small and mid-caps. He said the biggest risks to the market were oil surging to $150 a barrel, which could impact company earnings and the valuation itself if people fear an uncertain election outcome, for example.
The general elections are slated for April-May of 2024 after a slew of state assembly elections in Chhattisgarh, Madhya Pradesh, Mizoram, Rajasthan and Telangana get underway from November to December.
The Nifty P/E has increased to 23.03 during the latest leg of the market rally from 20.59 on 20 March. The earnings per share of the Nifty has risen to ₹850.9 from ₹810.84 over the same period.
Morgan Stanley, in a research report earlier this month, predicted a 10% pre-election rally in the market. Its base case is a victory for the National Democratic Alliance at the general elections, after which the Sensex or the Nifty could move up by 5% in the near term. However, a loss for the incumbent and a weak Opposition coalition at the Centre could see benchmarks tank by 40%, it warned.
For now, though, the market is poised to move higher. This is evident in options sellers’ huge sales of the 20,000 strike put expiring this Thursday relative to the 20,000 call. The put saw over 100,000 shares being added to outstanding positions, which stood at 111,530 contracts on Monday. The 20,000 call option saw just 46,469 contracts being added to the aggregate positions. Option writers sell more put options when they expect the market to not correct below the strike sold minus the premium received, which shows they remain bullish on the market.
