Why is Indian stock market flirting with record highs? — explained with 5 reasons

Stock market today: Extending its rally for yet another session, the Indian stock market bulls continue to outshine bears during Tuesday morning deals. All three frontline indices climbed to a new peak. According to stock market experts, today’s rally is participatory as in the broad market, the small-cap index continues to approach its existing lifetime high while the mid-cap index hit a new high of 41,172 mark. Among key benchmark indices, the Nifty 50 index hit a new high of 22,768 level, the BSE Sensex touched a new lifetime high of 75,124 mark while the Bank Nifty today climbed to a new record high of 48,940 level.

Stock market today: Top 5 reasons for extended rally

As per the Indian stock market observers, the Indian equity market is rising because of various reasons, which include US Fed rate cut buzz, ample liquidity in the market, strong global market sentiments, strong Q4 results 2024, and expected trend reversal in the Chinese economy.

Experts listed out these top 5 reasons that are fueling the Indian stock market:

1] Q4 results 2024: “After record GST collection and strong GDP forecast, the market is expecting better results season for the Q4FY24. So, the market is factoring in the expected strong results season that has kickstarted this week and is going to unfurl in full swing next week with the announcement of TCS Q4 results 2024 on Friday this week,” said Saurabh Jain, Vice President — Research at SMC Global Securities.

2] Strong global market sentiments: “Market is following strong global cues as well. We are witnessing bulls’ action in the US stock market after ushering in the new year 2024. In YTD time, Nasdaq has shot up over 10 percent in YTD, whereas the S&P 500 index has risen around 9.70 percent in 2023. The European stock market is also gaining upside momentum, signaling to come out of the base-building mode post-Russia-Ukraine war. The Chinese market is also trying to come out of the bears’ grip,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

3] Resurgence in the Chinese economy: “After a long lean patch, the Chinese economy is signaling some signs of recovery. As per the ASEAN+3 Macroeconomic Research Office (AMRO), the Chinese economy is expected to witness growth. There are media reports that the Mandarin economy may grow by around 5.30 percent this year, which has pumped the bulls’ sentiments on metal stocks. The recent rally in the metal stocks should be seen from this trend reversal buzz in the Chinese economy,” said Saurabh Jain of SMC Global Securities.

4] US Fed rate cut: “The market is full of buzz about the US Fed rate cut in the near term. If the US CPI data comes promising, then in that case the buzz would further grow and there can be more upside possible in the near-term as the US Fed rate cut would mean more liquidity in the market. As there is no dearth of liquidity in the Indian equity market, further rate cuts may fuel the Indian stock markets as more liquidity is expected in the wake of interest rate cuts. This is expected to happen in the global markets including Indian markets as the majority of the central banks across the world are waiting for the US Fed rate cut,” said Avinash Gorakshkar of Profitmart Securities.

5] Resurgent Indian economy: “Currently, India boasts the fastest-growing economy globally, with a promising future fueled by political stability. We appear to be in the midst of a major bull market, which is likely to persist for the next few years. The Sensex reaching 100,000 seems like a realistic possibility shortly. However, investors should prioritise quality stocks while maintaining a long-term investment approach,” said Santosh Meena, Head of Research at Swastika Investmart.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.