After touching 75,000 points before slipping into the red yesterday, the Sensex finally closed over the landmark number for the first time on Wednesday – a journey that has taken slightly-over 45 years since it started at 100 in 1979 (base year). The returns for investors have been spectacular at 15.85% compounded annual growth rate over this period.
It was a day when many major indices, including the benchmark and many sectoral, closed at their lifetime highs. Both Sensex rose 354 points or 0.47% to close at an all-time high of 75,038 points. Similarly, the Nifty closed at a lifetime high of 22,753 points. The BSE mid-cap index closed 41,110 points – another all-time high. Only the small-cap index was an outlier and closed lower than its lifetime high.
Seven sectoral indices including, commodities, consumer discretionary, financial services, bankex, metal, power and services indices joined the party and hit closing highs.
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Investor wealth also continued to rise and hit Rs 402 trillion – rising over Rs 2 trillion on a single day. Since the beginning of the financial year, investor wealth has risen by Rs 15.25 trillion in just 8 trading sessions.
Said Motilal Oswal, Group MD & CEO, Motilal Oswal Financial Services, “India’s capital markets have witnessed a surge in retail participation, with the number of demat accounts surging to 151 million in Mar’24 from 36 million in Mar’19.
According to him, the combination of institutional and retail investor participation has contributed to the resilience and dynamism of Indian markets, making them more robust and attractive for both, domestic and international investors.
D P Singh, joint CEO, SBI Mutual Fund noted, “Retail investors, along with global players, who look at India as a bright and sweet spot, will keep our markets steady in the short to medium term perspective.”
Both foreign and domestic institutional investor have driven the rally, with foreign institutional investors buying shares of Rs 7,762 crore (over $900 million) while domestic institutional investors have bought shares worth Rs 5,891 crore since the beginning of the financial year.
Market experts believe that the while the valuations are on the higher side – the Sensex’s 12-month trailing price to earnings ratio (P/E) is at 25.41x is higher than 10-year average of 24.48x. However, it is a tad lower than the five-year average of 26x. Singh believes that despite markets levels looking stretched, companies are catching up fast with good financial results.
A Balasubramanian, CEO, Burla Sunlife Mutual Fund says that the buoyancy in the market is likely to continue because there has been investment into infrastructure sectors by both the public and private sector that have benefitted a large pool of mid-sized companies.
Nilesh Shah, CEO, Kotak Mutual Fund has advice for market pessimists ‘the pessimist might sound intelligent but money was made by the optimistic. Have fun and be optimistic while investing’.
Of course, he is clear that people should stay invested in this market. “Don’t leave the amusement park. There are many rides which will be fun. At worst, you may have to wait a little for the fun to begin,” he added.