Why is Indian stock market rising today? – Forbes INDIA Advisor

The Indian stock market had a remarkable week, driven by a combination of positive economic indicators, strong corporate earnings and favorable global market conditions. Here's an in-depth look at why it's rising, the best-performing stocks and sectors, and current market data.

Market performance in June

On June 14, Indian stock markets reached historic milestones, closing at record highs among major indices. The Nifty 50, India's market benchmark, set a new record high as it rose 55 points or 0.24 per cent to close at 23,453.90. The BSE Sensex, a key market benchmark, climbed 139 points or 0.18 per cent, ending the trading session at 76,949.49, a few points short of its 52-week high of 77,145.46. This rally reflects widespread optimism among market participants and underlines the resilience of the Indian economy.

The Nifty Midcap 100, which tracks the performance of mid-sized companies, showed notable strength, jumping 527.30 points or 0.96 per cent to settle at 55,179.55. This indicates robust performance in the midcap segment, often seen as a barometer of economic growth and investor confidence.

Additionally, the Bank Nifty, representing the banking sector, closed in positive territory, gaining 133.80 points or 0.27% to end at 49,980.50. The strength in banking stocks highlights the sector's crucial role in driving economic expansion and market confidence.

These record highs represent a historic moment for the Indian stock market, reflecting investor confidence and the underlying strength of the economy.

What is the reason for the rise in the stock market?

Indian Defense Minister Rajnath Singh's announcement regarding the government's ambitious targets to boost defense sector exports and overall growth projections for the Indian defense sector contributed significantly to the recent summits in market, particularly in defense and shipbuilding stocks.

1. Increase in defense sector exports: The government's target to increase defense sector exports to INR 50,000 crore over the next five years has fueled market optimism. This target highlights the potential for growth and profitability in the defense manufacturing sector, leading to higher share prices of companies like PTC Industries, Paras Defense and Space Technologies, BEML, Bharat Electronics, MTAR Technologies, Bharat Dynamics, ideaForge Technology, Zen . Astra Microwave technologies and products. These stocks gained between 3% and 20%, reflecting investor confidence in their future earnings potential.

• Investor sentiment and growth prospects: The announcement boosted investor confidence in defense stocks, boosted by expectations of increased government spending, higher defense budgets and better export opportunities. The government's focus on 'Aatmanirbhar Bharat' and self-reliance in the defense manufacturing sector has further strengthened the market outlook for these stocks.
  Other reasons

1. Rebounding market: On the day of India's Lok Sabha election results, the market fell 6 as the Narendra-Modi-led Bharatiya Janata Party (BJP) failed to secure a clear majority in Parliament. The market quickly rebounded when it became clear that the BJP would form the government. Post fall, profit taking and value buying led the Sensex and Nifty to hit all-time highs.
2. Solid economic indicators: The Indian economy has shown significant resilience with better-than-expected gross domestic product (GDP) growth figures, strong industrial production data and falling inflation rates. This positive economic environment has strengthened investor confidence.
3. Strong corporate profits: Many Indian companies, especially in sectors such as IT, pharmaceuticals and banking, have reported strong quarterly profits. These results exceeded market expectations, sending stock prices higher.
4. Global market sentiment: Positive developments in global markets, including reduction in geopolitical tensions and signs of recovery in major economies like the US and China, have had a ripple effect in the Indian market. The US Federal Reserve's decision to suspend interest rate hikes has also increased foreign investment in emerging markets, notably India.
5. Government initiatives: Modi's retention as prime minister and his party's retention of key Cabinet portfolios imply that the government may be able to continue to focus on economic reforms, infrastructure development and policies it has implemented in both mandates to attract foreign investment. This has played a crucial role in increasing investors' investments in the stock market. For example, initiatives such as the Production Linked Incentive (PLI) program have boosted the manufacturing sector, allowing manufacturing inventories,

Best performing sectors in June

1. Computer science: The IT sector registered significant gains on the back of strong earnings reports from major companies like TCS, Infosys and Wipro. Growing global demand for digital transformation and IT services has strengthened the sector's performance.
2. Drugs: The pharmaceutical sector has benefited from strong export demand and successful product launches. Companies like Sun Pharma and Dr Reddy's reported strong profits.
3. Banking and financial services: The banking sector has seen a resurgence with improved asset quality and strong loan growth. Major banks like HDFC Bank and ICICI Bank have led the charge with impressive financial results.
4. Consumer goods: FMCG companies performed well on the back of increased consumer spending and rural demand. Companies such as Hindustan Unilever and ITC have reported strong sales growth.

Best performing stocks in June

• TCS: TCS has been a top performer in the IT sector, benefiting from large contract wins and strong quarterly profits.
• Trusted Industries: Reliance posted gains across its diversified portfolio, including its retail and telecom businesses.
• HDFC Bank: HDFC Bank's strong financial performance and market leadership in the banking sector have driven up its stock prices.
• Sun Pharma: Sun Pharma benefited from strong domestic and international product demand.

Market expectations

Major stock indices, the Sensex and the Nifty 50, started trading at all-time highs on Thursday, followed by the strong performance of global markets, boosted by a good report on US inflation, which sparked anticipation of a probable cut in interest rates by the American Federal Reserve.

Neeraj Sharma, assistant vice president of technical and derivatives research at Asit C. Mehta Investment Intermediates, says that technically, the index has formed a bearish belt hold pattern on a daily scale. If the index holds below 23,350, then profits are expected.

On the downside, immediate support for the Nifty is placed near 23,000, followed by 22,720, where the 34-day exponential moving average (DEMA) support lies, says Sharma.

Om Mehra, technical analyst at SAMCO Securities, believes that the short-term trend is likely to remain neutral to positive unless the 22,200 level is breached. A move towards the 22,270-22,300 range would present a buying opportunity, while a move above 23,500 could take the index closer to 23,650.

Sameet Chavan, head of technical and derivatives research at Angel One, said that after numerous attempts in the last few sessions, prices of the benchmark Nifty index finally crossed the 23,300 mark in closing. Yet a closer look at the daily chart reveals a series of three small candles, signaling hesitation at higher levels with a notable absence of sustained buying throughout the week.

Against this backdrop, the notable performance of mid- and small-cap stocks over the past few sessions stands out, prompting traders to identify these counters for potentially strong trending opportunities. Still, caution is advised against aggressive betting, especially in the current high market environment, says Chavan.

Conclusion

The remarkable performance of the Indian stock market over the last two days is testimony to the country's strong economic fundamentals, corporate sector and positive global market sentiment. As long as these factors remain favorable, the market will likely continue its upward trajectory, providing plenty of opportunities for investors.

For key indicators to look for in June, read Forbes Advisor India's stock market outlook.