Nifty-50 Hits 20,000 On Domestic Liquidity Driven Rally

Mumbai: National Stock Exchange's benchmark Nifty-50 index crossed 20,000 mark for the first time but closed a tad lower at 19,996.35 gaining 176.40 points or 0.89 per cent as market rallied for seventh session in a row on domestic fund buying.

Analysts meanwhile cautioned investor on the liquidity-driven rally where some segments of the broader market are looking overbought.

Market rally seems to have got a boost from equity mutual funds recording a much higher net inflow of Rs 20,245 crore in August, a significant surge compared to the Rs 7,626 crore observed in July. This inflow marked the highest flows in the past five months as per the monthly data released by Association of Mutual Funds in India.

Meanwhile BSE's benchmark Sensex also settled above 67,000 mark at 67,127.08 gaining 528.17 points or 0.79 per cent. BSE's all time high of 67,619.17 made in July 2023 remains to be surpassed.

The rally on Monday extended to the broader market too with NSE's Nifty Midcap 100 up 1.14 per cent and Nifty Small-cap 100 up 1.33 per cent.

 Almost all sectors participated in Monday's rally led by the banks, auto, power, metal, FMCG and realty sector stocks.

The heavy weights Reliance Industries(1.02 per cent) , HDFC Bank(0.59 per cent), Adani Ports(7.10 per cent) and Adani Enterprises( 3.68 per cent) among others seem to have also mattered in Nifty's new landmark achievement.

 Adani stock's gains were after G-20 summit announcing  a new rail-port connectivity through the Middle East to US.

BSE's market capitalisation soared to over Rs 324.26 lakh crore, a new all time high with a notional gain of over Rs 3.32 lakh crore.  

“India's resilient growth compared to global macroeconomic headwinds has given investors the confidence to maintain bullish bets and propelled benchmark Nifty past the 20K mark. The 7th consecutive session of gains has come despite persisting selling by foreign institutional investors and other vagaries like inflation, rising dollar, spiking US treasury yields and interest rate hike concerns. While undertone appears bullish, the market seems to be in an overbought position," said Shrikant Chouhan, head of Research (Retail), Kotak Securities.

"The domestic markets began the day on a positive note, bolstered by the historic consensus achieved at the G20 summit, which instilled confidence among investors.  Higher-than-expected loan growth data and strong profitability along with lower NPA in PSU banks attracted investor interest. Additionally, expectations of easing inflation, driven by a decline in vegetable prices, fueled optimistic sentiment, leading to a market rally," said Vinod Nair, head of Research, Geojit Financial Services

"This is a liquidity driven rally, and investors should tread cautiously in the market as valuations are expensive now with the Nifty-50 trading at a FY2025 P/E ratio of over 18 times, which is not cheap, and small/mid-caps are even more expensive in many cases," said Pratik Gupta, CEO & Co-Head, Kotak Institutional Equities.

“What is really impressive about India’s Nifty reaching this all-time high level is that it has been driven mainly by local flows in recent months, while FPI flow has been relatively subdued, partly due to limited global interest in Asia funds given the weak outlook for China which has a very high weightage in the region,” Gupta said.

"Nifty 50’s progress over last 27 years, since it was launched at initial number of 1,000 is a testament to the trust Indian  and foreign investors place in India’s capital markets," Ashishkumar Chauhan, MD and CEO, National Stock Exchange said commenting on NSE's new milestone.

 "More than 7.5 crore direct unique PAN numbers having investors are now registered with us suggesting that 5 crore households now directly invest a portion of their savings in equities market via NSE," Chauhan said.