Nifty 50 nears 26k: Bajaj Auto, Mahindra & Mahindra, ONGC lead the charge

Indian stock markets continued their upward trajectory, achieving new record highs for the third consecutive trading session on Monday.

The Nifty 50 index touched 25,956 points, just under the 26,000 mark, while the S&P BSE Sensex soared to 84,928 points.

The rise was largely driven by strong performances in financial services, realty, and auto stocks, with public sector unit (PSU) stocks also showing notable recovery.

At the close of the day, the Nifty 50 had increased by 0.57%, and the Sensex by 0.45%, reinforcing investor confidence in the market’s momentum.

PSU banks lead the way

Among the sectoral indices, Nifty PSU Bank led the charge, climbing by 3.40%.

Other indices including Nifty Realty, Nifty Oil & Gas, Nifty Auto, and Nifty Consumer Durables also contributed to the day’s gains, posting increases between 1.3% and 2.5%.

In total, 34 of the Nifty 50 constituents ended in the green.

Bajaj Auto climbed by 3.7%, followed closely by Mahindra & Mahindra, ONGC, Hero MotoCorp, and SBI Life Insurance, all recording gains between 2 and 3.3%.

Among public sector banks, the Bank of Maharashtra jumped 8.1%, followed by Punjab & Sind Bank, Indian Bank, Central Bank of India, and UCO Bank, all of which saw gains exceeding 5%.

Other prominent PSU banks, including Canara Bank, Bank of Baroda, and State Bank of India, posted increases between 1.9 and 4.5%.

Nifty Realty up 2%: Godrej Properties gains

The real estate sector also enjoyed a strong session, with the Nifty Realty index surging by 2.60% to reach a two-month high.

Godrej Properties was the top performer, gaining 6.8%, while DLF and Sobha also posted impressive gains of over 3% each.

The sector’s performance has been buoyed by declining interest rates, which are expected to reduce borrowing costs for heavily debt-funded real estate firms.

The US Federal Reserve’s decision to cut the funds rate by 50 basis points has played a crucial role in buoying Indian markets.

Following the rate cut, the Nifty 50 index saw a 3% rise.

Historically, India’s equity markets have shown strong performance three to six months after an initial rate cut in a non-recessionary environment.

While the impact has been widespread across sectors, analysts have pointed out that consumer discretionary, industrials and IT sectors stand to benefit the most from the reduction in borrowing costs.

Global brokerage firm Goldman Sachs, however, noted that while the gains were impressive, they were modest in comparison to other Asia-Pacific markets, where rate-sensitive sectors experienced more pronounced growth.

Sustained FPI inflows boost market sentiment

Foreign Portfolio Investor (FPI) inflows have been a significant factor behind the recent rally in Indian markets.

So far, September 2024 has seen ₹33,691 crore invested by FPIs, the second-highest monthly inflow this year.

These sustained inflows have been driven by India’s balanced fiscal policies, the effect of rate cuts on the Indian rupee, and favorable valuations.

In particular, the robust performance of Indian initial public offerings (IPOs) has attracted substantial foreign interest.

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