Nifty hits record high of 26,228: What's fueling the surge?
What's the story
India's equity benchmark, the Nifty 50 index, gained 0.7% to hit a new all-time high of 26,228 points on Thursday. Its previous peak was set in September 2024. The rally is largely attributed to renewed foreign investor interest and strong corporate earnings, with additional support from progress in the India-US trade deal negotiations.
Investor impact
Foreign institutional investors fuel market confidence
The recent surge in the Nifty 50 index is largely fueled by a $1.3 billion investment from foreign institutional investors (FIIs) in October. This marks a shift from their previous selling trend and is seen as a major confidence booster for the market. Siddharth Vora, a fund manager at PL Asset Management, emphasized this shift has significantly improved investor sentiment toward Indian equities.
Earnings performance
Nifty 50 companies exceed expectations
The latest quarterly results from Nifty 50 companies have exceeded expectations, further boosting market sentiment. Major banks such as Morgan Stanley and Goldman Sachs have turned bullish on India's market, predicting a turnaround in its historic underperformance against emerging market peers. These optimistic projections are based on the strong performance of Indian corporations and their potential for future growth.
Trade impact
India-US trade deal negotiations influence market
The ongoing negotiations for an India-US trade deal have also contributed to the Nifty 50 index's record high. Despite elevated valuations, the benchmark trades at about 21 times one-year forward earnings, compared to its five-year mean of 19.5. HSBC Holdings Plc analysts noted that "India looks attractive to us," and investors seeking alternative growth stories across Asia will closely watch the Indian market.