Nifty, Sensex At Record High: Five Reasons Behind The Surge

Indian equities staged a stellar rally on Thursday as multiple domestic and global triggers pushed the benchmarks to scale new highs.

The NSE Nifty 50 was just 40 points short of breaching the 23,000 mark, while the S&P BSE Sensex added nearly 1,200 points during the session.

The NSE Nifty 50 gained 1.75%, or 395.80 points, to a record high level of 22,993.60. The intraday percentage gain is the highest since March 28, when the index posted a 1.77% gain.

The Sensex rose 1.72%, or 1,278.85 points, to a fresh high of 75,499.91. The index posted the biggest intraday rise since Jan. 29.

Here are the key factors that could have led the rally:

The Reserve Bank of India on Wednesday decided to pay Rs 2.1 lakh crore—the highest-ever surplus—as a dividend to the central government for fiscal 2024.

This compares with the Rs 87,420 crore transferred to the government in the financial year-ended March 2023. Economists polled by Bloomberg had pegged the surplus transfer to the government at Rs 1 lakh crore for the fiscal.

This move led to a surge in the banking and financial stocks during the session. Nifty Bank surged 2.06%, while Nifty PSU Banks closed 1.72% higher.

In an exclusive interview with NDTV, Prime Minister Narendra Modi assured that the stock market will see new highs after the government comes to power for the third consecutive time.

The PM said that the performance of the markets during "election week", or the week in which results of the Lok Sabha elections get announced, will show who's coming back to power. The election results will be announced on June 4.

"When our government took over, the markets were at 25,000 and now they are at 75,000," Modi said. "See the PSU banks, their value is increasing in the stock market."

"Wait and watch on June 4; the programmers behind the stock market will get tired of the action," said Modi.

Meanwhile, Home Minister Amit Shah also said that the market will “shoot up” after the election results are announced on June 4.

The tech stocks in India surged on Thursday taking cues from its Wall Street peers after the global tech giant, Nvidia Corp. reported strong quarterly earnings.

While the Nifty IT index rose by 1.04%, the rally was led by Coforge Ltd. which gained by 2.89%, followed by Persistent Systems Ltd. and Mphasis Ltd.

In today's weekly expiry, premium at Nifty's call strike of 22,950—which held the second highest open interest rose—hinting that participants expected the market to stay above this level.

However, the call strike with the maximum open interest—23,000—saw a fall in premium as they did not anticipate the index to go beyond this level.

Premium at the put strikes of 22,950 also fell as the Nifty crossed this level in the spot market.

"An analysis of Nifty put options reveals a concentration of open Interest at the 22,700 level, implying potential support at this level," said Mandar Bhojane, research analyst at Choice Broking. "On the call side, significant OI concentrations are observed at the 23,500 and 24,000 levels."

Index heavyweight ITC Ltd. joined the rally in the last stages after it reported its earnings for the fourth quarter.

The shares of the FMCG major rose as much as 1.44%, after the results were announced.

ITC's net profit fell 1.3% to Rs 5,020 crore in the March quarter, but it met analysts' estimates.

Other factors like consistent buying by domestic investors and the voter turnout in the ongoing Lok Sabha election could have also added on to the positive sentiment.