Sensex, Nifty hit all-time peaks after RBI's highest-ever dividend announcement

Mumbai: Benchmark stock indices Sensex and Nifty rallied more than 1.6 per cent to close at lifetime high levels on Thursday following buying in banking, oil and auto shares and a record dividend payout by the RBI to the government.

Regaining the 75,000 level after its best single-day gain since January 29, the 30-share BSE Sensex closed at all-time peak of 75,418.04, up by 1,196.98 points or 1.61 per cent over the last close. During the day, it zoomed 1,278.85 points or 1.72 per cent to reach its all-time intra-day high of 75,499.91.

The NSE Nifty inched closer to the record 23,000 mark during the day. The 50-issue index went up by 369.85 points or 1.64 per cent to 22,967.65. During the day, it jumped 395.8 points or 1.75 per cent to 22,993.60 -- its intra-day record peak.

The headline index posted a record gain, with leading sectors such as banking and automotive outperforming. The RBI's record dividend is akin to an indirect rate cut, and is expected to reduce bond yields, Vinod Nair, Head of Research, Geojit Financial Services.

Early onset of southwest monsoon has provided a boost to the domestic market, which was underperforming in the last two months to other emerging markets,” Nair said.

Among the Sensex firms, Mahindra & Mahindra, Larsen & Toubro, Axis Bank, Maruti, UltraTech Cement, IndusInd Bank, HDFC Bank, Bharti Airtel, ICICI Bank, Titan, Tata Consultancy Services and Reliance Industries were the major gainers.

Sun Pharma, PowerGrid and NTPC were the laggards.

The Reserve Bank of India will pay a record Rs 2.1 lakh crore dividend to the government for the fiscal ended March 31, more than double of budgeted expectation, helping shore up revenue ahead of a new government taking office.

The RBI board, at its 608th meeting on Wednesday, approved the transfer of surplus, the central bank said in a statement.

“Today, there was enthusiasm in the equity market after the RBI approved a Rs 2.1 lakh crore dividend to the government. This indicates a better fiscal position and softer bond yields going forward.

As a result of this positive move, we are seeing some short covering in the market. If the election outcome aligns with current market expectations, we expect Nifty to reach new highs in the first week of June,” said Neeraj Chadawar, Head Fundamental and Quantitative Research, Axis Securities.

“The Nifty index has surged to a record high after the Reserve Bank of India (RBI) announced a substantial Rs 2.1 lakh crore dividend to the government. This development is a significant macroeconomic positive for the market, with direct implications for the fiscal deficit and bond yields,” Santosh Meena, Head of Research at Swastika Investmart Ltd, said.

In the broader market, the BSE midcap gauge climbed 0.58 per cent and smallcap index went up by 0.27 per cent.

Among the indices, auto climbed 2.28 per cent, capital goods by 2.13 per cent, bankex by 1.98 per cent, financial services by 1.64 per cent, services by 1.63 per cent, teck by 1.42 per cent, consumer discretionary by 1.19 per cent and IT by 1.18 per cent.

Metal index emerged as the laggard.

The market capitalisation of listed companies on the NSE hit USD 5 trillion mark.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, The Nifty hitting a new record is the market's message of political stability after the elections. The rally is healthy since it is led by fairly valued largecaps.” Nifty rose the most in percentage terms in almost 6 months on May 23, said Deepak Jasani, Head of Retail Research, HDFC Securities.

In Asian markets, Tokyo settled in the green while Seoul, Shanghai and Hong Kong ended lower. European markets were trading mostly in the green. Wall Street ended in negative territory on Wednesday.

Global oil benchmark Brent crude climbed 0.33 per cent to USD 82.17 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 686.04 crore on Wednesday, according to exchange data.

The BSE benchmark climbed 267.75 points or 0.36 per cent to settle at 74,221.06 on Wednesday. The NSE Nifty advanced 68.75 points or 0.31 per cent to finish at 22,597.80.