Raging bulls of India: D-Street dances to RBI record

Mumbai: India's benchmark indices soared to fresh all-time highs on Thursday as the Reserve Bank of India's larger-than-expected dividend payment to the government prompted traders to cover some of their bearish bets. Receding uncertainty over the BJP's performance in the general elections also bolstered sentiment, with the NSE Nifty ending a whisker away from 23,000.

The key index closed at a record 22,967.65, up 369.85 points or 1.64%, after hitting a peak of 22,993.60 during trade. The BSE Sensex rose 1,196.98 points, or 1.61%, to end at 75,418.04.

The market cap of all BSE-listed companies hit an all-time high of ₹420.22 lakh crore, or $5.05 trillion.


"There was short covering today as RBI announced a record dividend payout while hopes of favourable general election outcome seem to be getting stronger," said Ajay Menon, managing director and CEO, broking and distribution, Motilal Oswal Financial Services. Elections end on June 1 with votes being counted on June 4.

Fear Gauge Dips a Tad
The RBI announced a dividend of ₹2.1 lakh crore for FY24 to the government - the highest ever - against market expectations of about ₹1 lakh crore. The payout bodes well for government coffers and bonds as the funds will help reduce the FY24 fiscal deficit and could result in treasury yields softening.

"The market reacted favourably to RBI's dividend payment to the government, which will lead to strong fundamentals for the government to continue, and will have a cascading effect, positively impacting the fiscal balance movement and reduction in the cost of borrowing," said A Balasubramanian, MD and CEO of Aditya Birla Sun Life AMC. "The roadmap for reducing the fiscal deficit looks positive now and we may also see India get a rating upgrade globally."

Adani Group stocks led gains on the Nifty. Adani Enterprises soared 8.2% and Adani Ports jumped 4.8%. Banks and auto stocks were among the other top gainers. The Nifty Bank and Nifty Auto indices gained 2.1% and 2.3%, respectively. Foreign portfolio investors (FPIs) bought shares worth a net ₹4,671 crore on Thursday. So far in May, they have been net sellers to the tune of ₹21,000 crore.

The Volatility Index or VIX, the market's fear gauge, dipped 0.4% to 21.38. Analysts said the modest decline suggests risk sentiment hasn't been fully erased. It's jumped 108% in the past month as uncertainty over the outcome of the elections kept traders on edge. "Volatility is likely to remain high in the near term given the big event of election outcome and India VIX still hovering above 20 levels," said Menon.

Despite the elevated VIX levels, analysts said technical indicators point to continued bullish momentum.

"The bias is maintained very strong and can carry on with the positive move till the month end," said Vaishali Parekh, vice president, technical research, Prabhudas Lilladher. Parekh has a target of 23,200-23,700 for the Nifty.