Stock Market Update: Record High for Sensex Amid Rally
The stock market experienced a remarkable rally on 12 September, propelling the Sensex to an unprecedented record high. This surge has resulted in a significant increase in the market capitalization of the Bombay Stock Exchange (BSE), soaring by over Rs 6.5 lakh crore in a single day. For the first time, the Sensex crossed the 83,000-point mark, reflecting strong investor sentiment.
Factors Driving the Market Rally
Several key factors have contributed to today’s impressive rise in the markets:
- Decrease in U.S. Inflation: Reports of declining inflation in the United States have boosted investor confidence.
- Anticipation of Foreign Investment: Market participants are hopeful about the reinvestment of foreign funds, which could further enhance market performance.
- Reduction in Crude Oil Prices: Falling crude oil prices are alleviating concerns about energy costs, positively impacting various sectors.
- Strong IPO Performance: The enthusiastic response to recent Initial Public Offerings (IPOs) has added to the bullish market sentiment.
Market Capitalization Hits New High
The BSE has reached a total market capitalization of Rs 467.22 lakh crore, marking a 1.4% increase from the previous close. The Sensex surged by 1.77%, or 1,440 points, to settle at 82,962 points. In addition, both the mid and small-cap indices showed gains of 1.32% and 0.8%, respectively. This bullish trend emerges as investors keenly await the upcoming U.S. Federal Reserve meeting scheduled for next week, where a decision on interest rates will be made.
Expert Insights on Market Movements
Analysts have weighed in on the factors behind today’s market performance:
Ajay Bagga’s Perspective
Independent analyst Ajay Bagga suggests that the market rally is largely attributed to speculations about potential interest rate cuts by the U.S. Federal Reserve during the FOMC meeting on September 18. After a cautious start to September—often influenced by seasonal trends—investors are beginning to increase their exposure to emerging markets. This shift, combined with robust domestic investment, is driving momentum in India’s equity landscape.
Prashant Tapase’s Analysis
Prashant Tapase, an analyst with Mehta Equities, offers a more tempered perspective. He mentions that while the recent U.S. Consumer Price Index (CPI) data does not warrant an aggressive interest rate cut, other economic indicators suggest that the U.S. economy may face challenges ahead, potentially prompting the Fed to lower benchmark rates.
Concerns in Global Markets
As the global economic environment shifts, anxieties about China’s growth trajectory have emerged. Reports indicate that Chinese authorities may consider cutting interest rates on approximately $5 trillion in mortgages to rejuvenate consumer spending. Certain banks are anticipating cuts of up to 50 basis points to mitigate the domestic financial strain amid persistent deflation risks and weak spending.
Global Market Reactions
Despite the latest U.S. inflation report showing figures slightly above expectations, global markets have generally responded positively. Analysts suggest that there is a growing expectation among U.S. traders for the Federal Reserve to initiate interest rate cuts, potentially totaling around 100 basis points, by the end of 2024, starting with their upcoming meeting on September 17-18.
