Nifty touches all-time high of 22,126 points: What's driving rally?
What's the story
Today (February 2), the Nifty 50 index soared 2%, reaching a record high of 22,126.80 points during intraday trading. This is thanks to widespread buying and encouraging global signals. The Sensex also climbed 2%, hitting an intraday peak of 73,089.40, although it's still over 300 points shy of its January 16 high of 73,427.59 points. BSE Midcap and Smallcap indices joined the rally, each rising over a percent to achieve all-time highs.
Figures
Positive global cues and robust gains in heavyweights
Positive global cues, such as better-than-expected earnings from Meta and Amazon, boosted the domestic market. Asian shares benefited from a late surge in US tech stocks, while investors eagerly awaited US job data that could influence rate cut predictions. The Dow Jones increased by 0.97%, while the S&P 500 and NASDAQ Composite jumped 1.25% and 1.30% respectively overnight. Furthermore, significant gains in heavyweight shares from IT, banking, and oil & gas sectors contributed to the market benchmarks' ascent.
Result
Budget impact on Indian stock market
Although the Interim Union Budget 2024 lacked immediate stock market triggers, experts emphasized its long-term positive effects on the economy and market outlook. Astute investors took advantage of the opportunity to purchase high-quality stocks at lower prices, driven by faith in India's robust domestic growth story. Experts deemed the Budget consistent with expectations and applauded its pro-growth approach while balancing fiscal responsibility with significant capital expenditure.
Insights
Expert opinion on budget and market outlook
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated, "The non-populist Budget focused on fiscal consolidation is a big positive. The big allocation for rural housing will benefit all construction-related segments like cement, steel, paints, etc." He also pointed out the sharp drop in bond yields due to the net market borrowing being kept low at Rs. 11.75 trillion, which is advantageous for banks. The government's cautious balancing act could maintain India on a long-term growth path.
Possibility
Nifty may hit 22,500 this February
Technical experts claim that the Nifty 50 index might hit the level of 22,500 as soon as this month. "If Nifty 50 manages to close daily above 22,150, we can expect the rally to continue towards 22,400 and 22,500 levels by the end of February," said Riyank Arora, a Technical Analyst at Mehta Equities. "However, if there is any move below 21,900, that would be considered an immediate trend change," he added.