Nifty 50 set record highs 32 times in 2024, up 11% from June 4 low

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This marks the index’s third consecutive day of hitting record high, with six new highs achieved in June alone and more potential in the nine remaining trading days of the month. In May, the index set new records four times. Throughout CY24, the index has set record highs 32 times.

Following the unexpected results of the Lok Sabha 2024 elections on June 04, which caused the worst intraday performance in four years, the index quickly rebounded in the following sessions. 

The formation of a BJP-led NDA government at the center has reassured investors of policy continuity, particularly in key sectors such as infrastructure spending, domestic manufacturing, railways, defence, and power, which have been central to the government’s agenda over the past decade.

Also Read: Defence stocks surge up to 20% with Paras Defence, HAL, Garden Reach Shipbuilders, Mazagon Dock at record highs

With political stability and consistent policy frameworks in place over the last decade, India has emerged as a favored investment destination for global funds, despite its relatively high valuations. During this period, the Nifty 50 index has surged by over 210%.

Prime Minister Modi’s ambition of making India a developed country by 2047 should continue focusing on infrastructure, Make in India, energy self-reliance, defence, etc. However, increased focus should also be seen in mass developmental projects like employment, rural income, water for all, electricity for all, and poverty eradication, according to the analysts.

From the lows of 21,281 points on June 04, the index surged 10.70% over the subsequent nine sessions, underscoring its resilience and investor confidence in the market.

Also Read: Market not in a bubble, still below the long-term trendline, says Devina Mehra

Inflows resumed after clarity emerged

With political stability and assured policy continuity, foreign investors have resumed their buying spree in recent weeks, bolstering the market to trade at elevated levels. 

In the past two weeks, $2.4 billion has been allocated to India’s dedicated funds, marking the fastest momentum in history, according to domestic brokerage firm Elara Capital. 

Many funds that were previously waiting for clarity on the election outcome have now been actively deployed into India, resulting in a crowded move into the market. The largest inflows came from US investors ($700 million), followed by Ireland ($447 million) and Japan ($433 million). 

Also Read: FPIs slash bearish bets ahead of Union budget, set stage for rally

Notably, there were also inflows of $130 million from Korea, with all India-focused inflows concentrated in large-cap funds, as there has been no revival of flows into mid- and small-cap funds yet, stated the brokerage. 

Meanwhile, the shift of foreign funds from China to India has accelerated over the past three weeks. Chinese funds experienced FII outflows amounting to $2.3 billion during this period. Interestingly, Japan’s flows turned negative, with outflows of $753 million over the past three weeks, marking a significant change. 

Foreign outflows also accelerated from Taiwan and Brazil, with much of this capital finding its way into India. There are indications of Fear of Missing Out (FOMO) among foreign investors, as many fund managers are swiftly reallocating money into India while withdrawing funds from various other countries.

Also Read: When will Nifty 50 index climb to 30K peak?

Mexico is the only other emerging market besides India where inflows have expanded over the past three weeks. Overall, global equity flows have remained positive for the eighth consecutive week, largely driven by US funds. Globally, the momentum of flows continues to favor large-cap funds, according to Elara Capital.

Economic growth projections boost investor sentiment

Projections from leading agencies indicated a robust outlook for the Indian economy in the current fiscal year which has also bolstered sentiment among foreign investors. Fitch Ratings upgraded India’s growth forecast to 7.2% for the fiscal year, citing a rebound in consumer spending and increased investment. 

Also Read: Indian banks well placed with strong balance sheets, record profits, cheap valuations: CLSA; likes IndusInd, ICICI Bank

Similarly, the World Bank raised its GDP growth projection to 6.6% from 6.4%, reflecting optimism about economic recovery. The Reserve Bank of India also revised its GDP growth forecast upwards to 7.2%, driven by rising private consumption and a resurgence in rural demand.

Market cap hits record high

The market capitalisation of companies listed on the National Stock Exchange (NSE) surged to a new milestone, reaching 433 lakh crore, or $5.19 trillion, in today’s session. For the first time in May, the market capital of NSE-listed companies surged to $5 trillion. 

In a recent note, domestic brokerage firm Prabhudas Lilladher revised its 12-month target for the Nifty 50 index to 25,816, up from the previous target of 25,810. The report highlights that the Nifty 50 has immediate support around the 23,200 level, with a potential breakout above 23,500 likely to propel it towards the next target of 23,800.

The brokerage firm anticipates that a progressive budget, normal monsoon conditions, and strong inflows will contribute to further market re-rating over the next year.

Also Read: Sensex to hit 82,000 in 12 months over macro stability; global slowdown among key risks: Morgan Stanley

Prabhudas Lilladher values the Nifty 50 at a five percent premium to its 15-year average price-to-earnings ratio of 20.2x, up from 20x previously. Therefore, its bull case target stood at 27,102.

Conversely, in a bearish scenario, the firm projects Nifty 50 to trade at a 10 percent discount to the average, with a revised target of 23,235 compared to the earlier 23,229.


Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 18 Jun 2024, 05:15 PM IST


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