Equities took the winning streak to the third consecutive session and logged fresh records on Friday, leaving behind the nightmarish intraday slump of over 8% seen on Tuesday after unexpected poll verdict.
Despite the unprecedented sell-off on Tuesday, the benchmark Nifty 50 and Sensex registered their best week of the calendar year, indicating investors’ confidence on policy continuity under the new government. On Friday, the Reserve Bank of India raising FY25 GDP forecast also boosted sentiments on the Dalal Street.
The Sensex rose 2.2% to close at 76,693.36 points and the Nifty ended the day 2.1% higher at 23,290.15 points. This was the highest closing level for both the indices. While the Sensex also hit lifetime high of 76,795.31 points intraday, the Nifty was 20 points short of its intraday peak.
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The BSE Smallcap index also rose 2.2% and the BSE Midcap index rose 1.3%. With broad-based gains, the overall investor wealth rose by Rs 7.6 trillion to Rs 423.5 trillion.
“The RBI is playing the role of a perfect conductor. Music is flowing through in a melodious tone. Core Inflation is below Mid-Point of target, Inflation trajectory is falling, Growth is in the higher range, Rupee is stable, Liquidity is well balanced albeit with some skewness due to government spending. Market just want the show to go on which the credit policy has delivered. Why repair something which ain’t broken?,” said Nilesh Shah, Managing Director, Kotak Mahindra AMC.
For the week, the 50-stock index was up 3.4%, while the Sensex rose 3.7%. Rate-sensitive and defensive sectors like the information technology, fast-moving consumer goods and automobile were among the biggest gainers during the week.
On Friday, the RBI kept benchmark interest rate unchanged at 6.5% and kept policy stance of ‘withdrawal of accommodation’. However, two of the six members of the Monetary Policy Committee were in favour of cutting interest rates and changing the stance, which was one of the factors that provided boost to investor sentiment.
“This suggests that the RBI may be preparing the market for a change in stance in the upcoming meeting. On a positive note, the RBI upgraded the GDP forecast (for FY25) to 7.2% from an earlier projection of 7%, indicating solid prospects for the domestic economy in the future,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.
Consequently, the rate-sensitive sectors like automobile and realty caught investors attention. The Nifty Auto index ended 2.6% higher and the Nifty Realty index rose 2.1% for the day.
The Nifty IT index was the biggest sectoral gainer on the NSE on Friday as well as for the week, amid investors shifting to defensive sectors post the election results. The sectoral index rose 3.4% on Friday and 8.6% during the week.
Among other defensive sectors, shares of FMCG companies were on investors radar this week as hopes of higher rural spending by the new government raised prospects of revival in rural demand.
“We will likely see a range bound market from here on, with the Nifty moving between 22,500-24,500 points, unless and until we see re-rating on earnings attributed to rise in rural consumption, interest rate cut or any other significant development,” said Dhiraj Relli, MD and CEO of HDFC Securities.
