shadow

Benchmark stock market indices hit fresh all-time highs on Tuesday as investors remain optimistic about the present growth momentum. Both S&P BSE Sensex and NSE Nifty50 opened on a strong note today and kept rising, buoyed by gains in IT, auto, FMCG and pharma stocks.

At 12:35 pm, S&P BSE Sensex hit a fresh record high of 53,442.75 after rising 442 points, while Nifty50 crossed 16,000 for the first time ever. The benchmark indices rose even higher by 1 pm.

Even as there are fresh concerns regarding a global rise in delta coronavirus cases, investors on Dalal Street remain confident due to strong domestic economic indicators, a rush of initial public offerings (IPO) and strong company results in Q1FY22.

Read | Nifty crosses 16,000 for 1st time, Sensex at record high as bull run continues

Here are the key factors driving stock market growth:

STRONG CORPORATE RESULTS IN Q1

One of the biggest factors driving the stock market is a strong performance by Indian corporates across sectors in the first quarter of FY22. Many companies, especially IT firms, have performed better than expectations in the first quarter of the financial year, providing a big boost to bullish market sentiments.

Several brokerages have said that the first-quarter corporate earnings have benefited from the lower base of Q1FY21. One of the reasons why companies performed better in Q1FY22 was the fact that lockdowns were less intense than the corresponding period last year.

Brokerage firm Motilal Oswal Financial Services said, “Nifty profits for the 31 companies that have posted their results have grown 70 per cent year-on-year (YoY) against the expected 64 per cent YoY growth.”

IT, FMCG STOCKS SHINE

Another reason why benchmark indices hit all-time highs today was the boost due to gains in information technology and consumer durables (FMCG) stocks. Really, auto and Pharma stocks also performed well.

The Nifty Pharma, FMCG, Auto, Financial Services and IT indexes were all trading above 1 per cent at 1:45 pm. IT stocks have provided the biggest boost to the stock market during the pandemic as demand for digital businesses grew.

Pharma companies are also likely to support stock market growth as major pharma companies have continued to perform well.

ECONOMIC INDICATORS TURN POSITIVE

Positive economic indicators such as rising manufacturing activity, higher exports and declining fiscal deficit have also contributed to the optimism witnessed in the stock market this week.

A rise in goods and services tax collections, signifying higher economic activity, has also boosted stock markets. GST collections rose above Rs 1 lakh crore in July, up 33 per cent from Rs 87,422 crore in the corresponding month last year.

Meanwhile, India’s core sector growth has also increased 8.9 per cent in June 2021, compared to the June 2020 index.

Several other brokerages have also said confirmed that there has been a significant improvement in economic indicators from July after the economy suffered a major blow due to the second wave of the Covid-19 pandemic. Demand for goods has also witnessed an uptick in the wake of the improving consumer sentiments.

Decoded | What’s behind D-Street’s stellar performance since 2020

All of these economic indicators have boosted stock markets as investors remain optimistic about future growth. The fact that the Reserve Bank of India (RBI) is expected to keep key interest rates low is also likely to help the stock market keep up the momentum.

IPO RUSH

The rush in initial public offerings has also kept market sentiments high in 2021 as it has led to more investors entering the stock market.

As more companies go public, many people are investing in them in order to gain from the current momentum in the stock market. The IPO rush is likely to add more investors in stock markets this year and ultimately lead to higher optimism.

Author

India today

Leave a Reply

Your email address will not be published. Required fields are marked *