Markets

December Highs Take India’s Market Cap to Record $4.2 Trillion

 

India’s stocks are enjoying a ride at all-time-highs this December in an eye-popping run that has taken the country’s market capitalisation to a record $4.22 trillion.

Both Indian benchmark indexes registered record closes for a third straight day on Wednesday, with the NSE Nifty 50 rising 0.40% and the BSE Sensex index rising 0.52%.

BSE reported an all India market capitalisation of 351 trillion rupees, or more than $4.22 trillion.

 

Also on AF: India to Overtake China to Become Global IPO Leader

 

Both indices started the month on a high after edging past September peaks in a sharp up-move on December 1. The rally picked up on Monday after India’s ruling Bharatiya Janata Party (BJP) secured key victories in three out of four state assembly elections, ahead of the upcoming general election in 2024.

“The strong macroeconomic data, favourable political outcome from state assembly elections and improving global environment has moved sentiment to risk-on from risk-off,” Gaurav Dua, senior vice president and head of capital market strategy at Sharekhan, told Reuters.

“The party in Indian equity markets will go on,” he added.

And the party did, indeed, go on, backed by Indian technology and energy firms.

 

Graph: Reuters

 

Energy, tech, financial sectors back rally

The Nifty energy index climbed 1.55% to a new record, aided by a drop in crude oil prices to a five-month low amid doubts over OPEC+ supply cuts and China’s demand recovery.

IT companies, which earn a significant share of their revenue from the US, gained 1.67% on the day. Tech firms were tracking a rise in Asian technology peers, after softer-than-expected labour market data raised rate cut expectations in the United States.

“The recent drop in crude oil prices alleviates concerns about inflation resurgence,” said Jaykrishna Gandhi, head of business development – institutional equities, at Emkay Global Financial Services.

“Anticipation of a US interest rate cut early next year can further fuel foreign inflows, reinforcing market momentum,” Gandhi added.

The rally has also been backed by financial services-linked indexes like financials, banks, public sector banks and private banks.

Inflows in those indexes have been fuelled by several brokerages picking financials and large-caps as their top preferences, anticipating a rally in domestic equities ahead of the 2024 general election.

High-weightage financials fell 0.14% on Wednesday after rising in the last eight sessions.

 

Graph: Reuters

 

‘Weak rally’ concerns

Mid-cap stocks registered a 0.25% rise on Wednesday, while small-caps added 0.38%.

“There is gradual realisation that valuations are quite rich in small- and mid-caps, which could add to inflows into large-caps,” Dipan Mehta, director at Elixir Equities.

But some analysts are concerned that the upmove may not last too long.

“The current rally seems weak as mid and smallcaps continue to underperform,” Aditya Gaggar, Director of Indian brokerage Progressive Shares, told publication India Today.

Both Nifty and Sensex are also settled in the overbought zone now, with the Nifty’s relative strength index hitting its highest since September 16, 2021.

The Nifty 50 index is up more than 15% for the year so far, and a stone’s throw away from the key psychological level of 21,000.

BSE Sensex is up near 14% for the year, nearing a key milestone level of 70,000.

 

  • Vishakha Saxena, with Reuters

 

Also read:

India on Track to be World’s No3 Economy by 2030 – Firstpost

China’s Stock Index Near 5-Year Low After Moody’s Outlook Cut

Tata Tech Unit Valued at $6.4bn in Bumper Trading Debut

Growing Interest in Indian Drug Makers Amid ‘China De-Risking’

Buffett Dumps India Payments Giant Paytm at Over $60m Loss

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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