The total market capitalisation of all companies listed on the BSE crossed the $5 trillion mark on Wednesday, reaching its highest level in nearly six weeks as a rally in domestic equities gathered pace amid easing geopolitical concerns and falling crude oil prices.
The momentum comes after a strong recovery in the broader market over the past few sessions, supported by improved investor sentiment following developments related to the proposed US-Iran peace agreement and a sharp moderation in global oil prices.
According to analysts, the decline in crude oil prices, coupled with a drop in volatility indicators, helped improve risk appetite and supported gains across equities.
In addition, the rally has added more than 6 per cent to the market value of BSE-listed firms over the last four trading sessions.
Broader market indices continued to outperform benchmark gauges.
While Sensex has posted moderate gains since April, midcap, smallcap and microcap stocks have delivered stronger returns, reflecting wider participation in the ongoing market recovery.
The experts believe that easing tensions in West Asia could provide relief to India’s macroeconomic outlook by reducing pressure on inflation, the current account balance and corporate earnings.
Domestic equities have remained resilient despite persistent foreign institutional investor (FII) selling, largely due to steady inflows from domestic investors. Any improvement in foreign fund flows could provide an additional boost to market sentiment in the coming months, they said.
They further pointed to India’s long-term growth prospects, citing structural reforms, improving corporate balance sheets and rising capital expenditure as key drivers.
Corporate investment activity has strengthened significantly in recent years, while leverage levels have moderated and cash-flow generation has remained healthy, according to them.
Domestic equity benchmarks traded higher on Wednesday, with the 30-share index jumping as much as 0.53 per cent or over 400 points so far to 77,219. Similarly, Nifty traded 0.50 per cent or more than 100 points higher at 24,108.
Moreover, Sensex surged over 2 per cent in the last three sessions to today’s high against Friday’s closing of 75,527.95.
Analysts have expected that sectors such as banking, telecom and information technology will play an important role in the next phase of the market recovery.
