Historic Milestone: Sensex Breaks Through 86,000 Barrier
Indian equity markets achieved a significant milestone on Thursday as the benchmark Sensex surged past the 86,000 mark for the very first time during morning trading. The remarkable rally was powered by multiple factors including strong performance on Wall Street, expectations of interest rate cuts in both the United States and India, and sustained buying momentum from domestic institutional investors.
The Bombay Stock Exchange's 30-share index opened strong and climbed to an intraday peak of 86,056 points before profit-taking activity pulled it back from these historic highs. The index eventually settled at 85,720 points, still registering a respectable gain of 111 points for the day.
Nifty Follows Similar Trajectory to New Heights
The National Stock Exchange's Nifty index mirrored the Sensex's performance, touching its own lifetime high of 26,310 points during early trading sessions. Similar to its counterpart, the Nifty also retreated from its peak and concluded the day at 26,216 points. What makes this achievement particularly noteworthy is that both indices established new all-time closing highs, marking the culmination of a 14-month journey to reach these unprecedented levels.
According to Ajay Menon, MD & CEO of Motilal Oswal Financial Services' wealth management division, the current market rally has gained substantial momentum from anticipations of monetary policy easing by both the Reserve Bank of India and the US Federal Reserve. "This potential shift improves visibility for interest-rate-sensitive sectors and could trigger renewed foreign fund inflows," Menon explained.
Multiple Factors Driving Market Optimism
The bullish sentiment extends beyond just rate cut expectations. Market experts point to several supportive elements including early indications of corporate earnings recovery beginning this quarter, backed by GST rationalization measures and improving rural demand patterns. Additionally, growing optimism surrounding a potential trade agreement between the United States and India has further strengthened investor confidence.
However, Thursday's trading session revealed some interesting nuances in market behavior. The rally remained largely concentrated in large-cap stocks, while the BSE's midcap and smallcap indices both closed in negative territory. This selective movement resulted in a slight decline in overall investor wealth, with BSE's total market capitalization decreasing from Rs 474.9 lakh crore on Wednesday to Rs 474.3 lakh crore at Thursday's close.
Market breadth told a similar story. Among the 30 Sensex constituents, the advance-decline ratio remained perfectly balanced with 15 gainers and 15 losers. However, the broader market presented a different picture with declining stocks outnumbering advancing ones—2,220 declines compared to 1,936 advances, according to BSE data.
Domestic Funds Emerge as Key Market Drivers
The current bull run that propelled the Sensex to record levels began in October when the index stood at approximately 80,200 points. A significant turning point occurred during that month when foreign institutional investors turned net buyers after three consecutive months of net outflows.
What's particularly remarkable about the most recent phase of this rally is that it has continued despite the rupee hovering near record lows against the US dollar and marginal net outflows by foreign funds. This pattern clearly demonstrates that domestic funds, flush with consistent inflows through systematic investment plans in mutual funds—most of which find their way into equity schemes—have become the primary engine driving this market upswing.
Market participants are now closely monitoring several key triggers that could influence future direction. These include India's GDP data for the September quarter scheduled for release on Friday, along with potential developments in the US-India trade negotiations and the upcoming RBI policy announcement on December 5, as highlighted in a research note from Bajaj Broking.
