Indian stock indices touched their fresh lifetime highs briefly after the opening bell Thursday, continuing their uptrend from the previous session, primarily due to a moderation in inflation in May – both in India and the US. Other domestic economic parameters too are robust.

At the time of filing this report, Sensex traded at 76,975.71 points, up 369.14 points or 0.48 per cent, while Nifty was at 23,435.20 points, up 112.25 points or 0.48 per cent, respectively. Their highs were 77,145.46 points and 23,481.05 points, respectively. Barring a couple of them, all Nifty sectoral indices were in the green, NSE data showed.
India’s annual retail inflation eased to a 12-month low of 4.75 per cent in May from 4.83 per cent in April, government data showed on Wednesday.

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The retail inflation in India is in RBI’s 2-6 per cent comfort level but is above the ideal 4 per cent scenario. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well.
“There is good news on the inflation front, both in the US and in India,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, attributing to the markets’ firm performance. “The takeaway from the inflation numbers is that the disinflation process is well on track. From the market perspective, this is positive news, particularly for banking stocks.”

Strong buys by both foreign and domestic institutional buyers also supported the stock markets.

Overseas investors in Indian equities turned net buyers after a day on Wednesday. They bought shares worth Rs 427 crore, while domestic institutional investors stayed net buyers for the third day by buying stocks worth Rs 234 crore, according to provisional data from the National Stock Exchange.

Overall, however, foreign portfolio investors have been net sellers of Rs 29,878 crore worth of Indian equities so far in 2024, according to data from the National Securities Depository.

Going ahead, market participants will actively monitor the policy decisions of the new government. Nirmala Sitharaman, who has been again allocated the finance ministry portfolio, and her fresh decisions will be widely tracked. She will soon present the full Budget for 2024-25.

Ajit Mishra – SVP, Research, Religare Broking Ltd, said, “…we reiterate our recommendation to seek buying opportunities on dips, focusing on sectors and themes that are drawing consistent interest.”

Indian stocks have recovered handsomely after having witnessed a bloodbath on the day the Lok Sabha results were announced, where incumbent BJP performed below par and seemed it would fall short of exit poll predictions and the majority mark on its own. The national democratic alliance (NDA) though managed to get a comfortable majority, eventually.
Many investors booked their profits they accumulated from the gains they made a day after the exit poll predictions indicated comfortable majority for BJP. All of the losses incurred on June 4 have been recovered over the next few sessions and the indices are again at their record highs. A smooth transition in the government formation seemed to have boosted market sentiments.