• Indian equity markets closed high on Monday, with heavyweights like Adani Ports, L&T, SBI, HDFC Bank, and ICICI Bank boosting market sentiment.
• The Sensex and Nifty indices have shown a strong bullish trend, adding nearly 3,000 points in the last two trading sessions.
• Market experts attribute this positive sentiment to major state election results, which have increased the scope of stability in government spending.
• Despite weak global sentiment, robust domestic buying interest is evident, with Domestic Institutional Investors supporting the market with net purchases of Rs 1,722.15 crore.

The Indian equity markets closed on a high note on Monday, with heavyweights such as Adani Ports, L&T, SBI, HDFC Bank, and ICICI Bank bolstering market sentiment. The Sensex, a benchmark index of the Bombay Stock Exchange (BSE), closed at 80,109, marking an impressive increase of 992 points or 1.25 per cent. The Nifty, another major index of the National Stock Exchange (NSE), also followed suit, closing at 24,221, up by 314 points or 1.32 per cent.

This surge in the market is not an isolated incident. Over the last two trading sessions, the Sensex has added nearly 3,000 points, indicating a strong bullish trend. The banking sector led this rally, with the Nifty Bank closing at 52,207, up by 1,072 points or 2.10 per cent.

The market's upward trajectory was not limited to large-cap stocks. Mid-cap and small-cap stocks also witnessed significant buying. The Nifty Smallcap 100 index closed at 18,115, up by 360 points or 2.03 per cent, while the Nifty Midcap 100 index closed at 55,900, up by 883 points or 1.61 per cent.

Sectoral Indices and Top Gainers

All sectoral indices closed in the green, with Auto, PSU Banks, realty, energy, infra, and PSE contributing the most to the rally. In the Sensex pack, L&T, SBI, Adani Ports, HDFC Bank, ICICI Bank, Power Grid, Reliance, Kotak Mahindra Bank, TCS, HUL, Axis Bank, M&M, NTPC, and UltraTech Cement emerged as the top gainers. On the other hand, JSW Steel, Tech Mahindra, Asian Paints, Infosys, HCL Tech, and Maruti Suzuki were the top losers.

Market experts attribute this positive market sentiment to the results of major state elections, which have increased the scope of stability in government spending in H2FY25 to meet the capex target. The rally was broad-based, with capex-linked sectors like infra, capital goods, and industrials outperforming in expectation of a surge in new order inflows.

Experts remain optimistic about the prospects of H2 due to a good monsoon, festival, and marriage season, which could ease the impact of earnings downgrades that happened in Q2. This optimism is reflected in the market's performance and the buying trends of institutional investors.

Institutional Investors and Historical Precedence

On the institutional front, Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth Rs 1,278.37 crore. In contrast, Domestic Institutional Investors (DIIs) supported the market with net purchases of Rs 1,722.15 crore. This highlights robust domestic buying interest despite weak global sentiment.

This market performance is reminiscent of similar historical events. For instance, in 2017, the Sensex and Nifty hit record highs following the announcement of the Union Budget, which was perceived as market-friendly. The indices had surged by over 1.5 per cent, driven by strong buying in banking, auto, and realty stocks.