April 01 (Punjab Khabarnama) : Indian stock markets on Monday (April 1) started the first day of the financial year 2024-25 on a bullish note with key indices, Sensex and NSE Nifty, hitting all-time highs on strong buying in intra-day trades.
The Sensex opened at 73,968.62 against the previous close of 73,651.35 and rose about 0.82 per cent to hit its fresh all-time high of 74,254.62 within the first two hours of trade. The Nifty Index, on the similar lines, opened at 22,455 against the previous close of 22,326.90 and jumped 0.90 per cent to hit its new record high of 22,529.95.
The Sensex is trading at 74,062.40, up by 4,161 or 0.56 per cent, and the Nifty at 22,470.80, higher by 144, or 0.64 per cent at 12.40 pm.
The rally in frontline indices in the last few sessions suggest that markets have now recovered from the recent correction triggered by market regulator Sebi’s caution on the ‘froth’ in small and mid-cap stocks.
What’s driving stock markets?
Markets edged higher on the back of a firm trend in the Gift Nifty index and optimism in other Asian indices. “Investors are likely to resort to bargain hunting, and the recent reiteration by the US Fed that it is still looking at 3 rate cuts this year despite challenges from the inflation front is expected to keep the markets in good stead,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
There are reports of mutual funds introducing restrictions on redemptions from the small-cap schemes. “This is in response to the ‘frothy’ valuation in this segment and the concerns expressed by the regulator. The consequence of this action would be higher flows of funds into the large caps, which, in turn, can lift the large caps. So, watch out for large caps in automobiles, capital goods, financials, and select pharma which are likely to post good Q4 numbers,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Markets are pricing in a roughly 64 per cent chance the US Fed will cut rates by at least 25 basis points (bps) in June, according to CME’s FedWatch Tool. Fed Chair Powell noted that the Fed is not tolerant of higher inflation and hinted rate cuts very much remain on the table.
Moreover, foreign portfolio investors (FPIs) are showing positive sentiments for the market. FPIs invested over Rs 35,000 crore in equities in March.
What lies ahead for the markets?
Analysts say markets are likely to remain volatile as India heads for the 2024 general election. While intra-day volatility could continue in the near term, the focus will slowly shift to fourth-quarter corporate earnings which will start rolling in the next few days’ time.
The RBI monetary policy meeting scheduled to be unveiled on April 5 is likely to keep rates unchanged and, therefore, is unlikely to impact the market in a big way. However, markets will keep an eye on the RBI’s commentary on inflation and growth forecasts and the withdrawal of the accommodative monetary policy.
On the other hand, investors are likely to focus on large-cap stocks in the coming days as some fund houses have put restrictions on inflows and outflows in small and mid-cap stocks. FPIs are also likely to step up buying.
Moreover, investors are likely to resort to bargain hunting, and the recent reiteration by the US Fed that it is still looking at 3 rate cuts this year despite challenges from the inflation front is expected to keep the markets in good stead.