The rally in Indian stocks continued during the past four weeks supported by the return of foreign portfolio investors into the country's financial markets coupled with global inflation seems to have plateaued.
Benchmark indices - Sensex and Nifty - rose over 11 per cent in these four weeks on a cumulative basis, thereby recovering the entire losses they witnessed so far in 2022. In fact, the domestic equity markets marked their best week since February 2021 in July.
Notably, the latest consistent rally in Indian stocks has made investors richer by around Rs 21.8 trillion. The all-India market capitalization rose from Rs 25,319,892 crore on July 11 to Rs 27,503,289 till last updated on Thursday, Bombay Stock Exchange data showed.
"Indian benchmark equity indices extended their winning streak for the fourth straight week on buying demand in index pivotals. Positive global cues, sustained buying by FPIs and sliding crude oil prices boosted sentiment," said Deepak Jasani, Head of Retail Research at HDFC Securities.
Till early July, Foreign Portfolio Investors (FPIs) had been selling equities in the Indian markets for the past nine-to-ten months due to various reasons, including tightening of monetary policy in advanced economies, rising demand for the dollar and high returns from US bonds. They have pulled out Rs 202,250 crore so far in 2022, NSDL data showed.
In July, they were, however, the net buyer with a total purchase of Rs 4,989 crore. So far in August, they bought equities worth another Rs 22,453 crore, data showed.
In the meantime, retail inflation in the US and India has somewhat moderated, which improved buying sentiments amongst investors.
India's headline retail inflation fell to 6.71 per cent in July from 7.01 per cent in June, the lowest level in five months, helped by an easing in food and oil prices, as per the National Statistical Office (NSO) data released this Friday.
"The Indian market continued its upbeat rally ignoring any negative sentiment globally. However, indices are likely to witness correction in coming weeks amid high volatility and global recession concerns," said Sumeet Bagadia, Executive Director at Choice Broking.
Next week, financial markets around the globe are widely expected to respond to the guidance of the US Fed's minutes of the latest monetary policy meeting.
"A close eye will be kept on the Fed's projections and discussions of inflation and recession," said Apurva Sheth, Head of Market Perspectives, Samco Securities.
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