4 reasons why the Nifty hit an all-time high today

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The Indian market soared to a fresh high on Wednesday, as investors cheered the government’s recapitalisation package for public sector banks (PSBs) and Rs 7-lakh crore infra boost via the Bharatmala project. Derivative (F&O) expiry for the October series also aided sentiment.

 

S&P BSE Sensex ended over 33,000 for the first time ever - at 33,042 levels, up 435 points for the day. Nifty50, on the other hand, also achieved new milestone, ending at fresh closing high of 10,295, up 87 points.

 

“Market touched a new high led by the Government’s ideal plan to fix the credit growth and lack of private investment in the country, which was a key drag on the broad economic system. Ultimately it is giving a remedy to the NPA issues and capital adequacy of banks, which is an essential for credit growth,” said Vinod Nair, Head of Research of Geojit Financial Services.

 

Here are 4 factors that drove the markets to new highs:

 

Recapitalisation plan for PSU banks

 

PSU Banks gained 29% after Finance Minister Arun Jaitley spelt out an ambitious Rs 2.11-lakh-crore recapitalisation plan for PSBs. The announcement made post market hours on Tuesday led to a gap-up opening.

 

This move comes after Indradhanush, a seven-pronged strategy to revive PSBs introduced in 2015, where the government had announced an infusion of Rs 70,000 crore over four years to meet their capital requirements and make them compliant with Basel III global risk norms.

 

Nifty PSU bank index jumped as much 29.6% in its biggest intraday percentage gain since January 2011, with Punjab National Bank shooting up as much as 49% to its highest since February 2015. State Bank of India was the top percentage gainer in the NSE Nifty, surging as much as 27% in intraday to its highest since January 2015.

 

Infra Push

 

The Street reacted positively to the government’s infrastructure push after it approved Rs 7-lakh crore worth highway projects. The Bharatmala project hopes to construct 20,000 km of highways connecting western and eastern parts of the country.

 

Nifty Infrastructure index ended at a seven-year high. Larsen & Toubro (L&T), NCC, IRB Infrastructure, GMR Infrastructure, Siemens, Engineers India and Bharat Heavy Electricals Limited (BHEL) rallied up to 7%.

 

Global Factors

 

A steady move on the global markets also aided the rally back home. Both US and Asian markets have been trading on a strong note on the back of good earnings.

 

The Dow Jones industrial average rose sharply on Tuesday on the back of strong quarterly results from 3M and Caterpillar. The 30-stock index closed 167.80 points higher at 23,441.76, hitting intraday and closing record highs.

 

The Nikkei 225 rose 0.17% as the dollar held onto overnight gains. The benchmark index is rising high after notching its 16th straight winning session — its longest ever win streak.

 

October F&O Expiry

 

Rise in F&O rollovers to November also added to the sentiment. Market-wide rollovers till Tuesday stood at 35% compared with an average rollover of 31% seen in the last three F&O series. Nifty futures rollovers at 32% were higher than 28% rollovers seen on an average in last three series.


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