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Led by buying in () and other heavyweights in banking and IT stocks, India’s heartbeat index Nifty on Monday zoomed past its previous all-time record high of 18,604 hit earlier on October 19 last year. The index took 275 trading sessions to beat the feat touched 13 months ago.

After hitting a 52-week low of 15,183.40 on June 17, Nifty has rallied over 22% in a few months. Excluding

, which became part of the headline index on September 30 this year, has been the top gainer in the pack of 50 stocks since the last record high. M&M, and have been the other top gainers while , Divi’s Labs and have eroded wealth of up to 43% in between the two record-high levels.

Meanwhile, the 30-share BSE Sensex too hit its fresh intra-day record of 62,701.40.

At close, both the flagship indices clinched record high levels, with BSE Sensex closing at 62,504.80, up 211.16 points or 0.34% while Nifty50 ended the session, 50 points or 0.27% higher at 18,562.75.

Here are the key factors driving the rally on Dalal Street:

1) Fed pivot

Bulls are hoping that the US Federal Reserve will start moderating the pace of rate hikes. Wednesday’s decidedly dovish minutes from the Fed’s November policy meeting helped support stocks globally and not just in India. Analysts are now factoring in a 50 basis point rate hike by the US central bank in its December meeting.

2) Crude oil prices

Brent crude oil prices have slumped to near the $80 a barrel mark, its lowest level since January this year, as traders are worried that China’s additional COVID-19 lockdowns will hit demand. On the other hand, there are fears of an economic slowdown in Europe and the United States. A fall in oil prices is positive for India’s oil import dependent economy.

3) Weakening dollar

After slipping below the 83 mark against the US dollar, the Indian rupee is now above the 82 mark as investors shift towards riskier assets. The US dollar index, which had hit multi-year high of 114.78, has now cooled down to 106 levels.

4) FII and domestic flows

One of the key triggers of the ongoing phase of bull run has been the return of foreign institutional investors on Dalal Street this month. In November so far, FIIs have poured in around $4 billion of funds. Although domestic institutions have been taking advantage of the FII inflow this month to turn net sellers, they have been consistently buying the dip in recent months.

5) Strong Q2 numbers

Supporting stock valuations in India is the resilience shown in the September quarter earnings where Nifty companies grew by 9% as compared to expectations of flattish growth. “Excluding the global commodities, the growth stood out strongly at 33%. Going ahead too, we expect the momentum to remain strong with an expectation of Nifty earnings CAGR of 17% over next 2 years,” said Ajay Menon, MD and CEO, Broking and Distribution,


(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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