On Monday, the Nifty index flamboyantly breached the 20,000 level, driven by enthusiastic retail investors and domestic institutions who remained undeterred by crude oil spike (nearly $90 per barrel) and subdued foreign portfolio investors (FPIs).
The broader index achieved a historic high of 20,008.15, marking a substantial gain of 188.2 points, equivalent to 0.94 percent, during the trading day. Ultimately, it concluded just a few points below the milestone at 19,996.35, registering a gain of 176.40 points or 0.89 percent.
Additionally, the Peer Sensex exhibited buoyancy, surging by 528 points to reattain the 67,000 level. The 30-share Sensex index recorded an impressive rise of 528.17 points, corresponding to 0.79 percent, ultimately settling at 67,127.08.
Throughout the day’s trading, it displayed a remarkable rally of 573.22 points or 0.86 percent, reaching 67,172.13.
The journey from its inception in November 1995 with a base value of 1,000 to the 20,000 milestone took the Nifty 50 index precisely 27 years, 10 months, and 8 days.
This significant achievement coincided with Amfi data revealing a surge in net inflows into equity mutual funds, rising to Rs 20,245.26 crore in August from Rs 7,626 crore in the preceding month. This emphasizes the growing influence of domestic participants in propelling the bull market.
On the flip side, NSDL data indicated that foreign investors have been net sellers, offloading Rs 4,300 crore worth of investments thus far in the current month.
The day began on a positive note for domestic markets, buoyed by the historic consensus reached at the G20 summit, which instilled confidence among investors. Additionally, optimism was fueled by expectations of easing inflation, attributed to declining vegetable prices, which contributed to the market’s rally, as noted by some experts.
Nevertheless, experts hold divergent views on the sustainability of the current market rally.
They acknowledged the impressive achievement of the Nifty but cautioned that the rally is largely driven by liquidity and urged investors to exercise caution, emphasizing that valuations are now relatively expensive, with the Nifty 50 trading at a price-to-earnings (P/E) ratio of over 18 times for 2024-25, which is not considered cheap, especially when compared to certain smaller and mid-cap stocks.
In contrast, another expert expressed confidence in the sustainability of the 20,000 level and believes it may not be a fleeting one-day event, as the broader market has started to perform well after a subdued 2022-23. India’s status as a preferred investment destination is attributed to its stable growth and controlled inflation, making them optimistic about the future.