Dalal Street’s market capitalisation crossed Rs 500 lakh crore as Nifty and Sensex defied a global rout. Strong foreign buying in large-caps drove this rally, with investors adding Rs 35,781 crore in five sessions. Ponmudi R said, "The market’s ability to sustain its gains will be an important near-term indicator."
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Despite the global sell-off, Dalal Street has rallied sharply over the past week, leading its market capitalisation to cross the Rs 500 lakh crore mark. The gains are a result of strong foreign institutional investor buying in large-caps, which have seen a strong rally.
In the previous session, the m-cap of all listed firms surged to Rs 502 lakh crore as new paper, renewed FII interest, and a strong earnings show bolstered sentiment. In the past five sessions, FIIs have bought equities for Rs 35,781 crore.
In the previous session, foreign investors net bought equities worth Rs 14,796 crore, marking the largest daily buying over the past six years.
The interest in Indian equities from foreign investors comes as fears surrounding increasing regulation on artificial intelligence (AI) caused global indices to crash sharply. During this time, India's positioning as an anti-AI trade has resulted in a rotation of foreign capital towards domestic markets.
A broad-based sell-off caused the tech-heavy Nasdaq, the two-stock heavy Kospi, and Taiwan's Taipex to sink up to 6%, with some indices hitting their circuit breaker. However, India's Nifty 50 and Sensex have defied the sentiment to trade with gains in trade today.
Further, during the past five sessions, the Nifty 50 and Sensex have jumped nearly 6%, gaining 8% for the month so far. The recent rally and addition in m-cap have largely been driven by large-caps, as a result of impressive earnings growth, which has exceeded expectations.
While small-caps and mid-caps were rallying, experts often stated that large-cap stocks were attractively valued. As a result, most of the gains have been concentrated within this segment.
"Following the recent rally, the market’s ability to sustain its gains will be an important near-term indicator of underlying investor confidence. While the broader trend remains constructive, intermittent profit-booking at higher levels cannot be ruled out," said Ponmudi R, CEO of Enrich Money.
Going forward, geopolitical developments remain another source of uncertainty, with US President Donald Trump’s threat to expand military strikes against Iran keeping investors alert to the risk of further escalation. Any intensification of tensions could influence global risk appetite and trigger renewed volatility in crude oil prices.
Against this backdrop, investors are likely to remain cautious, with geopolitical developments, movements in global markets and profit-booking at elevated levels likely to shape near-term market direction, added Ponmudi R.