Indian equities continued their upward trajectory on Tuesday, buoyed by foreign fund inflows and positive sentiment in Asian markets. The benchmark indices also received a boost from strong buying in index heavyweights Infosys and Reliance Industries, along with record GST collections in April.
The 30-share BSE Sensex rallied for the eighth straight day, rising 242.27 points or 0.40 per cent to settle at 61,354.71. During the day, it reached a high of 61,486.24, up by 373.8 points or 0.61 per cent.
Foreign fund inflows have been a significant driver of the Indian equity market’s recent success. According to data from the National Securities Depository Ltd (NSDL), foreign portfolio investors (FPIs) have invested over Rs 20,000 crore in Indian equities in April. This marks the fifth consecutive month of net inflows and indicates growing investor confidence in India’s economic prospects.
The ongoing earnings season has also been a positive factor for Indian equities, with many companies reporting strong financial results. The country’s largest software services provider, Tata Consultancy Services (TCS), reported a 14.9 per cent year-on-year increase in net profit for the March quarter, beating analyst estimates. Other major companies such as HDFC Bank and Bajaj Finance have also posted robust earnings in recent weeks.
Meanwhile, the Indian government’s efforts to boost the economy through measures such as infrastructure spending and vaccination campaigns are also contributing to the positive sentiment in the equity market. The record GST collections in April are a testament to the country’s economic recovery, with GST revenues exceeding Rs 1.41 lakh crore for the first time since the introduction of the tax system in 2017.
The firm trend in Asian markets also helped Indian equities maintain their upward momentum on Tuesday. Japan’s Nikkei 225 index rose 0.51 per cent, while South Korea’s KOSPI gained 0.25 per cent. China’s Shanghai Composite Index also edged higher by 0.09 per cent, though Hong Kong’s Hang Seng Index dipped 0.26 per cent.
In terms of sectoral performance, the IT sector was the top gainer on Tuesday, with the Nifty IT index rising 1.54 per cent. Other major gainers included the Nifty FMCG index, which climbed 0.99 per cent, and the Nifty Pharma index, which advanced 0.95 per cent. On the other hand, the Nifty Realty index was the top loser, falling 1.40 per cent.
Looking ahead, analysts remain cautiously optimistic about the Indian equity market’s prospects. While the ongoing earnings season and positive economic indicators are supportive factors, concerns over rising COVID-19 cases and the possibility of stricter lockdowns continue to linger. The country reported over 3.57 lakh new COVID-19 cases on Tuesday, the highest single-day increase since the pandemic began.
However, the Indian government’s efforts to accelerate the vaccination campaign could help to mitigate the impact of the pandemic on the economy. The government recently announced that all adults in the country will be eligible for vaccination from May 1, a move that could provide a boost to consumer confidence and economic activity.
