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New Delhi, September 20 (HS). The domestic stock market created a new history of strength on Friday. Both Sensex and Nifty closed at their highest level. Sensex crossed the 84 thousand point level for the first time and reached above 84,600 points and Nifty was successful in crossing the 25,800 point level for the first time. Due to this rise, the market capitalization of companies listed on BSE also crossed the level of Rs 471.9 lakh crore for the first time. The main reason behind today's rise was the reduction in interest rates by the US Federal Reserve (US Fed) and strong buying in banking sector shares.
According to market analyst Shubhendu Bhattacharya, after the US Federal Reserve cut interest rates by 50 basis points, the global market has also seen a bullish trend. The US Fed has indicated further cuts in interest rates. Due to this, investor sentiment has also remained high. The biggest thing is that foreign investors have started buying openly after the US Federal Reserve's decision, which has also strengthened global sentiments. Its effect is clearly visible today in the Indian stock market as well as the Asian markets.
Shubhendu Bhattacharya says that after the US Federal Reserve cut interest rates, the pressure on the Reserve Bank of India to reduce rates may increase. It is believed that a decision to cut interest rates may be taken in the monetary policy committee meeting of the Reserve Bank of India to be held in December. Due to the expectation of interest rate cut by the Reserve Bank of India, the sentiments of the domestic stock market remained positive today, due to which the domestic stock market was successful in touching new heights despite facing the pressure of profit booking.
Similarly, Prashant Dhami, Vice President of Dhami Securities, says that the sentiments of the domestic stock market are already positive. Especially in the banking sector, there has been strong buying since last week. Nifty's bank index was seen trading strongly for the seventh consecutive day. Due to positive sentiments, the Nifty bank index reached its highest level of 53,357 points in the day's trading today. The bank index has gained more than 4 percent in the month of September. Even today, the shares of big banks like HDFC Bank, ICICI Bank and Kotak Mahindra registered a gain of 1 to 2 percent, which played a big role in boosting the overall market sentiment.
According to Prashant Dhami, there was strong buying in midcap and smallcap stocks today. For the last few days, there was continuous profit booking in midcap and smallcap stocks, but today investors also invested heavily in small and medium stocks. Due to this, the BSE midcap index closed with a gain of 1.16 percent and the smallcap index closed with a gain of 1.37 percent today. Smallcap and midcap stocks were trading under selling pressure for the last 3 consecutive days, but the rise in these stocks today also played an important role in making the market sentiments positive.
Dhami says that the reduction in interest rates by the US Federal Reserve is sure to increase liquidity in the global market. This may increase the interest of foreign investors in the Indian markets even more than before. He said that things like weakness in the dollar index and reduction in interest rates in the US should be considered very good for emerging markets like India. Due to the weakness in the dollar index, foreign portfolio investors have been continuously buying in the Indian stock market for the last few weeks. The enthusiasm of the domestic stock market remained high today due to the expectation of possible purchases by foreign investors.
However, experts say that small investors should not get too excited by today's rise, because there is every possibility of correction in the domestic stock market in the coming days. The value of stocks with high valuation may fall in the coming days. Therefore, retail investors should finalize their plan to invest in the market only after thinking carefully and consulting investment experts.