Mkts set to slow down
BSE Mid-Cap and BSE Small-Cap indices delivering annualized returns of 34.6% and 37.7% respectively
image for illustrative purpose
Aiding Factors
- Strong GDP growth
- No further interest rate hike hinted by US Fed
- BJP winning Assembly polls in 3 States
Chennai: The two Indian stock markets – BSE and NSE- are witnessing a bull rally on the back of positive economic and political factors, said industry experts and an economist. BSE Sensex hovering above 71,000 points, while the NSE’s Nifty 50 surpassed 21,000. Analysts also said the speed at which the stock market indices are rising will get moderated.
“Surely, this is a bullish period for the Indian stock markets. BSE Sensex and Nifty have given one year returns of 11.6 per cent and 12.7 per cent respectively. But the returns from mid and small-cap stocks have been significantly higher with BSE MidCap and BSE SmallCap indices delivering annualized returns of 34.6 per cent and 37.7 per cent respectively as on December 8. Over the last one month, the BSE Sensex and Nifty have returned 7.7 per cent and 8.1 per cent respectively. These are indications of a strong bull market,” Suman Chowdhury, Chief Economist and Head - Research, Acuité Ratings & Research, told.
“A confluence of many positive events has led to this kind of sustained up run. Q2-FY24 results were largely in line; macro numbers in India continue to be positive. State elections outcome pleasantly surprised market participants; inflation seems to be coming under control. Ten-year bond yields in US have fallen sharply after forming a high of five per cent. Foreign Portfolio Investors (FPI) have returned to Indian markets post mid-November. All these have resulted in providing positive triggers to the stock markets,” Dhiraj Relli, Managing Director and CEO, HDFC Securities Ltd told IANS.
Elaborating further, Chowdhury said the market is driven by three fundamental factors- strong gross domestic product (GDP) growth, no further interest rate hike expected by the US Federal Reserve and BJP winning the elections in three major states.
Chowdhury said: “Strong domestic GDP growth which is reported at 7.7 per cent for the first half of the fiscal; despite some expected moderation in the second half, GDP growth for FY24 is expected to average between 6.5-7.0 per cent which will clearly place India as the fastest growing economy among the larger nations.”
He added: “The expectation of no further interest rate hikes in December-23 by the US Fed followed by a rate cut in another three months in global markets which will lead to a renewal of FPI flows to Indian markets.”
“The BJP won elections in three north Indian states in early December which has significantly raised the likelihood of a clear majority for the party in the upcoming general elections, translating into political stability and higher prospects of economic reforms over the next 2-3 years,” Chowdhury added.
