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Nifty makes history, touches 10,000: Key factors

Image result for NiftyEquity benchmark NSE Nifty touched the psychological mark of 10,000 for the first time in Tuesday’s opening trade. The broader index opened at 10,010.55, gaining 44.15 points.

Here are some of the key points which contributed to the surge:

  • Optimism among investors

The policies introduced by the Narendra Modi-government have provided a sense of optimism in the markets.”Expectations of a rate cut in interests by the RBI (Reserve Bank of India) and economic reforms have made India an attractive destination for investments”, said Sanjiv Bhasin,Executive VP- Market & Corporate Affairs, IIFL.
Market is indeed bracing itself for a rate cut after consumer inflation cooled down to a record low of 1.54 per cent in June, analysts said.

  • Buoyant Forex Reserves

Besides, the stock markets, India’s forex reserves have also been hitting all-time high levels. On July 14, it rose by $2.68 billion to touch a new peak of $389.06 , helped by an increase in foreign currency assets (FCAs), RBI data showed. In the previous week, the reserves had marginally declined by $161.9 million to $386.377 billion.

Also, the rupee has gained over 5 per cent so far this year against the dollar, making the Indian currency one of the top performers in Asia.

  • Liquidity

Market experts are of the opinion that there is a lot of liquidity in the market which is the major force behind this surge. According to NSE data, Overseas investors have pumped in $ 2.4 billion in the capital markets this month, encouraged by the smooth roll-out of GST, taking the total to $25 billion so far this year. Foreign Portfolio Investment (FPIs) invested a net Rs 2,977 crore in equities during July 3-21, while they poured Rs 12,371 crore in the debt markets review, translating into a net inflow of Rs 15,348 crore.

  • Impressive Q1 results

Despite concerns of sedentary first quarter (April-June) results due to de-stocking ahead of GST, the earnings have come across to be impressive. Healthy profits were reported by Reliance Industries on Friday and HDFC Bank on Monday.

One of the leading domestic mortgage lender Indiabulls Housing Finance on Monday reported a 25 per cent jump in the June quarter at Rs 788.2 crore. Ambuja Cement and Zee Entertainment have also reported impressive profits in the quarter ending on June 30.

  • Performance of blue chip stocks

Shares of blue chip companies like Reliance Industries, Wipro, ICICI Bank have hit 52-week highs recently, mainly on the back of their first quarter earnings.

Moreover the announcement by RIL of issue of bonus shares in the ratio 1:1 and that by Wipro of buying back shares worth Rs 11,000 crore have also played a part in Nifty’s latest achievement.

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