Nifty sits at record high above 22,150, Sensex nears 73,000

  • India’s Nifty and Sensex extend bullish momentum into the fifth straight day on Monday.  
  • Nifty sits at all-time high near 22,150, Sensex rebounds after turning red in the first hour of trading.
  • Nifty and Sensex traders brace for a relatively light India’s economic docket and Fed Minutes from the US.  

The Sensex 30 and Nifty 50, India’s key benchmark indices, are holding moderate gains in  Monday’s trading, shrugging off a cautious mood seen in their Asian counterparts. The Indian indices extend the previous week’s upward trajectory, led by an upsurge in banks and auto sector stocks and upbeat India’s economic data.  

The National Stock Exchange (NSE) Nifty 50 adds 0.51% on the day to flirt with the all-time high of 22,171.60. The Bombay Stock Exchange (BSE) Sensex 30 gains 0.47% to trade near 72,800.

Chinese markets reopened after a week-long Lunar New Year holiday while the US stock markets are closed on Monday, in observance of Presidents’ Day.

Stock market news

  • Grasim, Bajaj Auto, Bajaj FinServ, Bajaj Finance Limited and UPL are the top gainers on the Nifty so far this Monday while losers include SBI Life Insurance, L&T, HDFC Life Insurance, Tata Motors and LTIMindTree.
  • Among the corporate news, Bajaj Auto announced February 29 as the record date for a proposed buyback plan amounting to Rs 4,000 crore, at Rs 10,000 per share.
  • Shares of Rail Vikas Nigam (RVNL), a railway infrastructure company, soared nearly 12% to ₹281.30 apiece in early trade on Monday after the company said its order book touched ₹65,000 crore, with 50% of this coming from the railway projects.
  • Shares of Paisalo Digital rallied 15% to hit a record high of Rs 164 on Monday, surging 63% in past month on promoter buying and strong December quarter (Q3FY24) earnings. 
  • Novartis India share price surges nearly 11% to hit a 52-week high as Novartis AG announces sale plans for the company.
  • Indian stock exchanges rank first in the world in terms of the number of IPOs in 2023
  • India’s trade data for January showed Thursday a shrinking Trade Deficit of $17.49 billion.
  • US Consumer Price Index (CPI) and Producer Price Index (PPI) data came in hotter-than-expected and helped push back the market’s expectations of a Fed rate cut from March to June. Markets are currently pricing a 77% chance of a cut in June, the CME Group’s Fed Watch Tool shows.
  • Attention now turns toward the Minutes of the Fed February meeting and American tech major Nvidia Earnings report due on Wednesday, as the Indian economic calendar remains devoid of any top-tier data release.


How does the Indian economy impact the Indian Rupee?

The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.

What is the impact of Oil prices on the Rupee?

India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.

How does inflation in India impact the Rupee?

Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.

How does seasonal US Dollar demand from importers and banks impact the Rupee?

India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.

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