Stock Market: Sensex Up Over 3,600 Points In A Month

The benchmark BSE Sensex and Nifty both reached new highs on Tuesday amid persistent investor optimism, demonstrating the strength of the Indian stock markets.

The Sensex has increased by more than 3,600 points, or 5.7%, over the past month, reaching an all-time high of 66,985.50 on Tuesday. During the same period, the Nifty increased by over 1,000 points, or 5.1%, to reach its peak of 19,811.25.

Strong foreign inflows, support from global markets, easing US inflation hinting at the end of the rate-hike cycle, and expectations of a strong earnings season at home for the quarter ending June 2023 are some of the factors analysts attribute to the sharp increase in indices.

The world’s factors inspire optimism

Following the US inflation rate’s decline to a two-year low in June, international markets, particularly Asian equity indices, are on the rise. The US consumer price index (CPI) increased by 3% in June when compared to the same month last year, but the core measure only grew by 4.8%, the smallest increase since 2021.

While analysts still predict that the US Federal Reserve will raise interest rates once more at its meeting on July 26, the likelihood of another increase at the meeting in September is waning as a result of declining inflation.

Additionally, after the US reported better-than-expected quarterly gross domestic product (GDP) growth of 2% in the first quarter of the current fiscal year and declining jobless claims, the economic outlook for the world is improving, which is supporting global markets.

Positive data on all fronts, including jobless claims, inflation, and growth, have lowered expectations that the US was about to enter a recession.

A foreign investor has confidence in the Indian market

In the meantime, foreign portfolio investors (FPIs) have consistently supported Indian markets, which has contributed to maintaining the upward trend.

According to exchange data, foreign investors invested a net $5.7 billion in Indian equities in June, the largest inflow since August 2022, on the assumption that the monsoon season will be normal and there will be a strong earnings season.

FPIs bought Indian stocks for the fifth straight month in July, according to NSDL data.

Indian stock markets have become a bright spot for foreign investors in an otherwise gloomy global environment thanks to solid growth predictions for India from numerous international agencies.

Positive Quarter-1 results

Strong earnings growth is anticipated for the quarter ending in June 2023 (Q1FY24), which is also causing Indian stocks to rise. The largest private lender in India, HDFC Bank Ltd., announced a 30% increase in net profit for the June quarter, beating estimates. Before that, leading software exporter Tata Consultancy Services Ltd (TCS) reported a 1st quarter net profit increase of 17% which was higher than anticipated.

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Early signs are promising, and markets appear to be preparing for a strong earnings season that will pave the way for the rally’s next leg. However, analysts caution investors to exercise caution as any disappointing economic news could result in a significant sell-off.