Bulls on parade on Dalal Street
India's market capitalisation reaching ₹400 lakh crore, followed in quick succession by the benchmark Sensex cresting 75,000. It's a double whammy worth a doubly good cheer. The three immediate takeaways from the twin peaks are the speed of the rally, its breadth and the investors driving it.
It has taken less than a year to add ₹100 lakh crore to market value, with domestic investors pushing small- and mid caps to a territory the regulators have described as 'frothy'. The twin records were broken in the middle of an uninterrupted rise this month in the small cap indices as foreign portfolio investors turned net sellers in the cash market so far in April.
The caution by FPIs, which pumped ₹2.08 lakh crore into Indian equities in FY24, may not be keeping up with the bullishness of Indian investors. However, this is expected to be robust during the current financial year as well.
The share of FPI holdings in Indian equities is declining steadily, but still acts as a spur to market movements. In that sense, the milestones achieved this week appear sustainable when FPIs resume buying. There is little evidence either to indicate domestic mutual fund flows will lose their momentum.
It has taken the Sensex under four months to add 5,000 points, or around 4%, which is slower than the average rate for the trailing 12 months.
Some amount of profit-taking is underway. Over a broader time horizon, though, Sensex has converted ₹549.43 held on April 1, 1986, into ₹75,000 on April 9, 2024. That is no mean feat.
Read more on economictimes.indiatimes.com
