Benchmark indices subdued but market cap at a new high on rally in broader space

Benchmark indices were subdued and range-bound, as they have been for nearly three weeks now, but the market capitalisation of BSE-listed companies hit a new high on September 7, thanks to a rally in the broader space.

The BSE Sensex reclaimed the psychological 60,000 mark in August, followed by a correction and consolidation. The 30-share benchmark index has traded within a range between 58,000 and 60,000 points for nearly three weeks while the NSE’s Nifty50 has moved between 17,300 and 18,000 levels.

But the broader markets have outperformed the front-liners on rotational buying and rising confidence among market participants of the Indian economy’s resilience compared to global peers.

After recent falls, the BSE Midcap and Smallcap indices gained more than 6 percent each, outpacing the BSE Sensex that gained 3 percent.

Market capitalisation

On September 7, the broader markets gained more than half a percent, but the BSE Sensex had fallen by one-third of a percent.

As a result, the market capitalisation of BSE-listed firms hit an all-time high near Rs 281 lakh crore on September 7, up by Rs 46 lakh crore since June 20.

Even in the past month, there has been an addition of around Rs 10 lakh crore of investor wealth as the BSE’s market capitalisation increased from Rs 271.3 lakh crore on August 5.

Also read: FPIs park record funds in Indian equities in August, financials beat FMCG this month

"We all know that India is definitely in a sweet spot. What people are appreciating or maybe putting some sort of a better value to is that India as a market or an economy is better placed than most global markets," Santosh Joseph, founder and Managing Partner at Germinate Investor Services LLP, said.

India is enjoying a little bit of premium, and if the rest of the world markets deteriorate further, the premium may increase and local markets may perform better for a long time to come, he said.

Also, despite global headwinds, India’s Gross Domestic Product (GDP) grew 13.5 percent in the first quarter of the financial year, albeit on a low base. Goods and Services Tax (GST) collection of more than Rs 1.4 lakh crore for the sixth consecutive month in August, and consistent credit growth also boosted market sentiment.

Also read: Power sector set for a long haul on sustained demand spike, large capex push

Capex cycle seen reviving

In addition, experts are betting on a strong revival in the capital expenditure cycle in the coming years on consistent government spending, implementation of Production-Linked Incentive (PLI) schemes and planned capex by companies to increase production.

Significant buying in midcaps and smallcaps in the past few weeks has made 52-week highs and lows, and upper and lower circuit ratios more favourable to the bulls.

On September 7, 328 stocks touched the upper circuit and 139 stocks the lower circuit, while 173 stocks hit a 52-week high compared to 19 stocks at a 52-week low.

In fact, 76 stocks hit record highs, including Adani Enterprises, Blue Dart, Brigade Enterprises, Grindwell Norton, Garden Reach and Shipbuilding, Hindustan Aeronautics, Ingersoll Rand, KEI Industries, SBI Life Insurance and Timken India which are from A group.

Also read: L&T, financials hot favourites of analysts; pessimism centres around IT, FMCG stocks

In the B group, Automotive Axles, Data Patterns, Goodluck India, Vedant Fashions, Paradeep Phosphates, Prudent Corporate Advisory Services, Speciality Restaurants, Rolcon Engineering, Timex Group India, Vadilal Enterprises, and Easy Fincorp were at record highs today.

Ambuja Cements, Apollo Tyres, Coal India, Container Corporation of India, Elgi Equipments, Indian Hotels, Jai Corp, Kirloskar Oil Engines, LG Balkrishnan, M&M Financial Services, NTPC, Schaeffler India, Shoppers Stop, Siemens, TVS Motor Company, Unichem Labs, Westlife Industries and Anant Raj clocked 52-week highs.

Disclaimer: The views and investment tips offered by market experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.