Sensex, Nifty Hit All-Time Highs: Here’s Why

On the date of May 23, the Nifty 50 index reached an unprecedented pinnacle, marking a historical zenith at 22,993.60 points, while the Sensex also soared to a monumental peak, registering an all-time high of 75,499.91 points. This surge of 1.7 per cent in both the Nifty 50 and Sensex indices on May 23 was catalyzed by the commendable Q4 earnings of India Inc., the remarkable dividend disbursal by the RBI to the government, and a burgeoning assurance in the realm of elections.

The stocks of banking behemoths such as HDFC Bank, ICICI Bank, and Axis Bank prominently propelled the ascent of the Sensex and the Nifty 50 index, capitalizing on a substantial plummet in India’s 10-year bond yields post the RBI’s substantial dividend allocation to the governmental coffers.

The collective market capitalization of entities listed on the BSE swelled to nearly Rs 420 lakh crore from Rs 416 lakh crore in the preceding session, thereby endowing investors with an additional wealth accumulation of approximately Rs 4 lakh crore within a solitary day.

A total of 222 equities, including Bharti Airtel, Mahindra and Mahindra, Ashok Leyland, Eicher Motors, Tata Steel, Adani Enterprises, and Adani Ports, ascended to fresh 52-week zeniths during intraday trading on BSE.

“Nifty concluded at an unparalleled altitude on May 23 subsequent to the RBI’s disclosure of a monumental dividend allocation to the government on the antecedent evening. At the closing bell, Nifty burgeoned by 1.64 per cent or 369.9 points, resting at 22967.7. The cash market transactions on the NSE escalated to Rs.1.32 lakh crore,” articulated Deepak Jasani, the head of retail research at HDFC Securities.

The broader market gauges experienced a milder ascent compared to the Nifty, owing to a concentration of buying activities in frontline equities, notwithstanding a persistently negative advance-decline ratio at 0.83:1. Globally, stock markets witnessed an upsurge on Thursday, buoyed by robust forecasts from AI icon Nvidia, propelling a rally among global semiconductor manufacturers. Concurrently, surveys indicating an amelioration in business activities across the eurozone prompted traders to recalibrate their anticipations regarding interest rate adjustments this fiscal year,” Jasani appended.

Market participants largely brushed aside concerns stemming from China’s military maneuvers around Taiwan and the escalating trade tensions between China and the U.S. in the aftermath of President Joe Biden’s administration’s announcement of imposing fresh tariffs on approximately $18 billion worth of Chinese imports, effective from August 1, targeting pivotal sectors such as electric vehicles and semiconductors.

“Nifty recorded its most significant percentage surge in nearly half a year on May 23, characterized by the formation of an elongated bullish candlestick. It is now poised to ascend towards 23175 on the upside, with a support level at 22794 in the foreseeable future,” analyzed Nilanjan Dey, the director of Wishlist Capital.

“The attainment of a fresh pinnacle by the Nifty underscores the market’s endorsement of political stability post-elections. The upswing is robust, given that it is propelled by large-cap equities that are reasonably valued,” opined V K Vijayakumar, the Chief Investment Strategist at Geojit Financial Services.

“The most salient aspect contributing to the market’s buoyancy is the record-breaking ₹2.11 lakh crore dividend remitted by the RBI to the government, affording an additional fiscal leeway of 0.3 per cent of GDP to the government. This translates to an opportunity for the government to curtail its fiscal deficit and augment investments in infrastructure,” elaborated Vijayakumar.