The Nifty 50 index, representing India's top 50 companies, surged to a historic milestone, breaching the 20,000 mark for the first time on Monday, and in the following session on Tuesday, the index extended its bull run to mark another new record high of 20,110.
This remarkable achievement has been driven by several factors, including the strong economic growth, robust corporate earnings, solid loan growth, an unprecedented retail investing boom, and the success of a pivotal G20 summit.
Most importantly, successful deals at the G20 summit, spanning sectors like railways, shipping, biofuels, and power transmission, have bolstered investor confidence, positioning India favourably on the global stage.
After finishing August on a downward note, the index made a strong recovery in September, gaining 3.84% thus far. Out of the last eight trading sessions this month, the index concluded only one in negative territory, with a marginal cut of 0.02%.
The index approached the 20,000 level for the first time on July 21, coming within just 8 points of this historic level. However, it finally crossed this historic mark in its second attempt, taking 36 sessions to achieve this feat. The index hit the 19,000 mark on June 06, 2023, and it took 52 trading sessions to cover the next 1000 points.
From its March 2020 low of 7,511, the Nifty 50 has risen 166% to date. India is now the world’s fifth-largest stock market.
"Optimism regarding India’s growth prospects in a low-growth world and a fast-decelerating China has triggered this rally, enabling the Nifty to cross the psychological 20,000 mark.
"FIIs, too, have joined the party with a buy figure of ₹1,473 crores after five days of continuous selling in the cash market. The fact that FIIs have made this purchase when the US 10-year yield is at 4.29% indicates that the FOMO (Fear Of Missing Out) factor is driving their decision," said Vinod Nair, Head of Research at Geojit Financial Services.
What sets this achievement apart is the fact that, among the major global indices, the Nifty 50 now shines brightly, and it is the only benchmark index in Asia that has registered new record highs.
Among major Asian indices, Kosdaq is trading 15.44% lower than its all-time high, South Korea’s Kospi is 23.52% away from its record high, Japan’s Nikkei 225 is down 16%, the Shanghai Composite is 49% below its all-time highs, while the Topix and Hang Seng Index are down 19% and 46%, respectively. The Jakarta Composite is also down 6% from its all-time high, according to data from Tradingview.
In 2023, foreign investors have made significant net purchases of Indian stocks, amounting to over $16 billion. This marks the largest inflow in three years. Notably, India's performance stood out, especially in August, when overseas funds were selling shares in nearly all other Asian emerging markets due to a global selloff.
In contrast, Chinese stocks experienced a record outflow during the same period. Beijing's efforts to restore market confidence did not resonate with investors, who remained concerned about an ongoing property crisis, according to media reports.
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