The combined value of all listed companies on the Bombay Stock Exchange (BSE) came tantalizingly close to reaching the $5 trillion mark on Tuesday, ending just $3 billion shy of the milestone at $4.997 trillion. This surge was driven by gains in mid-cap and large-cap stocks.
RBI Dividend Boosts Market Sentiment
The near-historic closing coincided with the Reserve Bank of India (RBI) issuing a substantial dividend to the government, amounting to ₹2.11 trillion, double the market’s expectations. This unexpected windfall, coupled with the market cap increase, could boost market sentiment in the long run, according to experts.
Over 118 trading sessions leading up to Wednesday’s close, the total market capitalization across all Indian companies surged by a whopping ₹77.45 trillion, reaching ₹416.13 trillion. Contributions to this surge came significantly from the BSE Midcap 150, which added ₹18.4 trillion (23.8% of the total increase), followed by the Sensex 30 at ₹16.18 trillion (20.9%) and the BSE Smallcap 250 at ₹6.73 trillion (8.7%).
The top performers during this period included stocks like Trent, Cummins India, REC, PFC, Reliance Industries, ICICI Bank, SBI, Bharti Airtel, and M&M.
Domestic Investors Offset FPI Selling
Despite foreign portfolio investors (FPIs) selling ₹25,716 crore worth of shares this year, domestic institutional investors (DIIs) and proprietary traders have offset this with net purchases of ₹1.9 lakh crore and ₹37,578 crore, respectively.
Swarup Mohanty, CEO of Mirae Asset MF, highlighted the significant role of domestic retail investors, particularly through mutual funds, in driving the market rally.
The RBI’s dividend payout is seen as a boost for the incoming government, providing funds for continued infrastructure spending without increasing the fiscal deficit, as noted by Nirmal Jain, founder of IIFL Group. This stability, both political and economic, is expected to benefit the markets in the long term.
In terms of performance, the BSE Midcap 150 index has surged by 24.1% to a record 14,642.43, followed by the BSE Smallcap 250 with a 20.1% rally to 6,377, and the Sensex, which gained 10.9% to 74,222.06, all since November 29.
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