Key Factors Behind the Surge Include Political Stability, RBI Dividend, and Strong Domestic Investment!

The Indian stock market witnessed robust buying interest on Thursday, May 23, propelling the benchmark indices, Sensex and Nifty 50, to unprecedented highs. The Nifty 50 surged by 1.6%, opening at 22,614.10 and reaching a new record of 22,959.70. Similarly, the Sensex rose by 1.6%, starting at 74,253.53 and hitting an intraday high of 75,407.39. As of 2:35 pm, the Sensex stood 1.30% higher at 75,182, while the Nifty 50 was up 1.33% at 22,898. Additionally, the Nifty Midcap index increased by 0.30%, and the Smallcap index 100 saw a marginal rise of 0.05%.

Experts Have Identified Five Crucial Factors Driving This Market Rally:

1.  Political Stability Post-Elections: Reduced election-related uncertainties are encouraging investors to buy quality stocks, anticipating a stable political landscape and a positive long-term market outlook. V K Vijayakumar from Geojit Financial Services noted that the new records indicate expected political stability.
2. Macro-Economic Boost: The Reserve Bank of India's record ₹2.11 lakh crore dividend to the government has positively impacted market sentiment, aiding fiscal targets and allowing for increased infrastructure spending. Declining crude oil prices further support economic stability by controlling inflation.
3. Strength in Banking Sector: Banking heavyweights like HDFC Bank, ICICI Bank, and Axis Bank contributed significantly to the indices' gains, buoyed by a drop in India's 10-year bond yields following the RBI's dividend announcement. The Nifty Bank index saw a near 2% intraday jump.
4. Domestic Investment Surge: Domestic institutional investors (DIIs) have been major buyers in the market, counterbalancing the offloading by foreign investors. Data shows DIIs purchased ₹38,331 crore worth of Indian stocks in May, while foreign investors sold ₹38,186 crore in the same period.
5. Technical Momentum: Soni Patnaik from JM Financial Services highlighted that the Nifty 50 crossed a crucial resistance level of 22,800, with potential to reach 23,000 by month's end. Strong support bases are forming, evidenced by aggressive put options writing.

 These factors collectively contributed to the bullish sentiment, pushing Indian stock market indices to new heights.