Sensex soars above 80,000 to touch uncharted skies; what's fuelling the bull run?

Strong GST collections and manufacturing PMI index bouncing back to 58.3 in June along with expectation of healthy Q1 earnings had a positive impact on the market

Indian stock market surged to an all-time high on July 3 with Sensex crossing the 80,000 market for the first time ever. The gains were primarily driven by index heavyweight HDFC Bank.

The private lender's stock rallied around 3 percent to hit a fresh 52-week high, with investors factoring in the news of potentially increasing the weightage of the Nifty stock in the MSCI EM index.

Factors driving Sensex rally

HDFC Bank's weight in the MSCI EM Index is around 3.8 percent. Post-rejig, this could jump to 7.2 percent-7.5 percent.

A possible doubling of HDFC Bank's weightage in the global index can bring in up to $4 billion of FII flows and the stock can cross the Rs 1,900 mark, according to Nuvama Institutional Equities. The stock contributed to 50 percent gains for Sensex today.

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Banking stocks: Aside from HDFC Bank, other banks such as Axis Bank, ICICI Bank, and Kotak Bank also supported the frontline indices, driving them to higher levels. The strong rally in banking stocks drive the Nifty Bank index to a new all-time high of 53,201.

As of 11:00 am, all 10 BSE Bankex index constituents were trading in the green, with HDFC Bank and Federal Bank leading the gains at 3 percent.

FMCG stocks also contributed to gains as Britannia Industries, Zydus Wellness, Mrs. Bectors Food Specialities, Tata Consumer Products, Nestle India and Dabur India rose up to 2 percent.

The revival of the monsoon after a deficient June spell is good news for the FMCG market, especially in rural areas. Several FMCG firms are positive on the govt’s initiatives to drive rural income and expect positive steps in the upcoming budget.

Strong GST collections in June, manufacturing PMI index bouncing back to 58.3 in June, and expectation of healthy Q1 earnings has a positive impact on the market. India Inc is expected to report a positive Q1FY25.

According to Vinod Nair of Geojit Financial Services, the broad market’s positive earnings growth to persist in the coming quarter, with forecasts projections of 12-15 percent for FY25.

“Q1 earnings growth is expected to be slightly better than the FY25 estimate, supported by strong monthly high-frequency economic data. The RBI has also indicated that Q1 GDP growth is likely to be robust at 7.3 percent.

The strong performance of Q4FY24 is expected to carry into Q1 FY25, with Nifty500 earnings growth at 18 percent in Q4 likely to be sustained with a further positive bias in Q1,” he said.

Also Read | HDFC Bank’s spell of underperformance may be over as MSCI weight likely to increase

The upcoming Budget has also stoked positive sentiment as it is expected that several sectors are likely to benefit from new or expanded Production Linked Incentive (PLI) schemes.

Strong global cues also uplifted the markets as the S&P 500 closed at 5,509 overnight, marking its first finish above the 5,500 threshold. The Nasdaq Composite jumped nearly one percent, settling at 18,028, another record high.

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