Sensex and Nifty 50 Indices hits all time high: Key factors driving the market

Benchmark indices hit fresh highs on Tuesday, trailing their global counterparts amid strong global and macro cues. Realty, auto and FMCG stocks were in demand. Equity indices soared to record highs on Tuesday with the benchmark BSE sensex jumping over 850 points led by gains in IT, consumer and financial stocks.

The 15,550-15,950 Nifty range, which held throughout July, is likely to be broken in August. Even though FIIs have been pressing sales at the upper end of the band (they sold stocks worth Rs 1,540 crore yesterday also), the market momentum is not in their favour now, said an analyst.

Titan, HDFC, Nestle India, IndusInd Bank, Ultra Cemco, and SBI were the top gainers in the sensex pack, gaining as high as 4.16 percent. 

The only losers were Bajaj Auto, Tata Steel, and NTPC, which all fell by 0.28 percent.

Except for Nifty Media and Metal, all other sub-indices on the NSE platform closed in the green, with Nifty FMCG and financials up 1.73 percent.

Here are the Top 5 Reasons for Market Indices Rally

1. Tech, FMCG and Financial Stocks Surge

As economic indications indicated to a rebound in demand, information technology, financial services, and fast moving consumer goods (FMCG) companies led the market rise.

The Nifty FMCG sector increased by 1.73 percent, the Nifty IT index increased by 1.18 percent, and the financial services sector increased by 1.68 percent.

According to experts, healthy macro-economic data as well as better-than-expected quarterly results boosted investors’ sentiments.

2. IPO Push

Nykaa, an e-commerce cosmetics firm, is planning an initial public offering (IPO) to raise $500 million, making it the latest indigenous startup to seek a listing on the domestic exchanges. In the first four months of the current fiscal year (April-July), about 12 companies have raised a total of Rs 27,000 crore through IPOs, with a healthy pipeline for the rest of the year.

3. Factory Activity Growth Picks up

Last month, manufacturing activity rebounded, and the country’s trade imbalance increased to $11.23 billion from $9.4 billion a month earlier, with experts pointing to a return to normalcy after tariffs were lifted. “Things in India are still going well, with industrial output figures and the manufacturing purchasing managers index both positive in July,” Anita Gandhi, wholetime director at Arihant Capital Markets, told news agency Reuters, adding that unlocking of restrictions is also a positive factor.

4. Good GST Collection

After a hiccup in the previous month due to the second wave of Covid-related limitations, tax receipts on products sold and services provided recovered to above Rs 1 lakh crore in July, indicating an increase in economic activity.

Goods and Services Tax (GST) mop-up grew 33 per cent year-on-year in July to over Rs 1.16 lakh crore, indicating that the economy is recovering at a fast pace. In July 2020, the collection was Rs 87,422 crore. This is the second highest collection so far this fiscal after a record Rs 1.41 lakh crore mop-up in April.

5. Strong Corporate Results

IT firms have posted better than expected numbers in the first quarter of the current financial year, giving a boost to bullish market sentiments. “Fundamental support to the bulls has been coming from good corporate results.

With the falling fiscal deficit, growing tax receipts, and now the strong success in exports, the macroeconomic are becoming quite favourable. V K Vijayakumar, chief investment strategist at Geojit Financial Services, told news agency PTI that the PMI of 55.3 “indicates a possible strong reversal in economic activity.”

Also Read: 7 Must Read Books Before You Die