The Indian market indices moved reasonably gradually on Thursday morning after hitting record highs the day before. Hence, analysts have cautioned that the high price may momentarily scare away investors.
Nifty is some points higher whereas Sensex is 14 points down. Nifty’s Auto, Metal and Media all saw increases among the Nifty sectorals while Nifty IT and Nifty FMCG among others experienced declines. The standard market, Sensex, reached an all-time high on Wednesday after many sessions of strong trading.
The rise in domestic stocks is related to both the global market recovery and sound domestic macroeconomic fundamentals. The Sensex eventually closed at 63,523 points, up 0.31 percent, after hitting a record high of 63,588 points. The Sensex has generated 4% returns so far this year and has increased by around 23% in the last 12 months.
The markets traded in a positive territory due to solid fundamentals such as a positive GDP projection, moderate inflation, and robust purchases by foreign investors.
Because Indian market values are now high, according to VK Vijayakumar, chief investment strategist at Geojit Financial Services, a prolonged run beyond record highs seems unlikely. He said, “India stands out among emerging markets with the best growth- inflation balance. However, the big wall of worry is the rich valuation, which might invite institutional selling beyond a point.”
The financial markets may continue to be concerned about the southwest monsoon’s delayed development in the future. Typically, the monsoon has an impact on the nation’s economic prospects. Kerala typically experiences the monsoon on June 1, with a standard variance of roughly seven days. Particularly for the Kharif crops, it is essential. The three harvesting seasons in the nation are kharif, rabi, and summer. But this year, the southwest monsoon arrived on June 8—a week after it was supposed to start on June 1—and has since made patchy and inconsistent progress across India.
In the meantime, US stocks declined on Wednesday for a third straight day as a result of the central bank’s truculent warning that the aggressive monetary tightening campaign isn’t over and that policymakers still anticipate more interest rate increases this year to combat inflation. In his Semiannual Monetary Policy Report to the Congress, Federal Reserve Chairman Jerome Powell stated, “Inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go”.
Recently, the main interest rate was halted by the monetary policy committee of the US Federal Reserve. In order to combat inflation, the policy rate has been kept at 5.0–5.25 per cent, despite being close to zero following the COVID-19 outbreak. Raising interest rates reduces demand and often contributes to lower inflation.