Sensex shoots past record 63,588 on better macros

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The BSE benchmark Sensex climbed 0.4 percent to an all-time high of 63,588.31 points on June 21 on the back of continued buying of local equities by foreign investors aided by improving macroeconomic factors and expectations of a longer pause on interest rate hikes by the Reserve Bank.

The NSE Nifty hit a high of 18,875.90 on Wednesday, around 10 points away from its record intraday high of 18,887.60 points reached on December 1, 2022. The Sensex had touched 63,284.19 points the same day.

The rally in the Indian equity markets started after March 28 and both the benchmark indices gained nearly 10 percent since then. Foreign investors have bought equities worth around $8.28 billion in this period.

"The sustained flow of better-than-expected domestic macroeconomic data kept the market mood afloat, with the Nifty Midcap trading at all-time highs. The domestic CPI data moderated closer to the RBI’s target due to the tone-down in food inflation and a favourable base, which increased the likelihood of a rate cut by the end of the year," said Vinod Nair, Head of Research at Geojit Financial Services.

The positive market reaction was also after the widely held view among analysts that the corporate performance during the March quarter was better than expected.

A Moneycontrol analysis of 148 companies in the BSE200 Index that have reported their earnings for the March quarter showed that aggregate net sales increased 12.3 percent on-year. The net profit of these companies surged 21.44 percent sequentially — the fastest in six quarters — and the operating profit margins of these companies for the quarter stood at 21.27 percent — the highest in four quarters.

Falling inflation and improving fundamentals, including recent data on GST, PMI, auto, and domestic air-passenger numbers as well as accelerating gross domestic products (GDP) have boosted investor confidence.

India's GDP forecasts are being upgraded, with the RBI projecting a 6.5 percent growth for FY24. Inflation has also declined to 2-3 year lows with the WPI negative and CPI below 5 percent. The RBI has also paused its rate hike campaign. And the rupee sees support from an improving current account deficit, which is trending near breakeven.

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