Nifty 50 (NSE) Surpasses 23,000 Milestone: Can Indian Stock Market Maintain Its Momentum?

<ul>
    <li>The Nifty 50, the benchmark index of the Indian stock market, hit the 23,000 mark for the first time in intraday trade on Friday, May 24.</li>
    <li>Despite reaching this milestone, the index quickly erased all gains and slipped into negative territory.</li>
    <li>V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the rally was driven by a sudden shift in FII trade from sellers to buyers.</li>
</ul>
<p><strong>Discover the latest developments in the Indian stock market as the Nifty 50 hits an all-time high, but can it sustain the gains? Experts weigh in.</strong></p>
<h2><strong>Market Hits New Highs</strong></h2>
<p>The Nifty 50 opened at 22,930.75, surpassing its previous close of 22,967.65, and rose by 0.3% to hit a fresh all-time high of 23,026.40. However, the gains were short-lived as the index slipped into negative territory. Similarly, the Sensex also reached a new high of 75,636.50 but failed to maintain its altitude due to profit booking.</p>
<h3><strong>Factors Driving the Rally</strong></h3>
<p>Experts observed that the rally in the Indian market was primarily driven by foreign institutional investors (FIIs). "The rally in the Sensex yesterday was triggered mainly by the sudden shift in FII trade from sustained sellers to big buyers, resulting in the purchase of ₹4671 crores. The massive short-covering caused by this sudden change in FII trade contributed to the sharp rally," said V K Vijayakumar.</p>
<h2><strong>Can the Market Sustain Gains?</strong></h2>
<p>Some experts believe that the market benchmarks may sustain gains while the mid and small-cap indices may see some selling after the Lok Sabha election outcome on June 4. "The gains in the Nifty 50 and the Sensex are sustainable with political stability at the Centre. Both the Sensex and the Nifty 50 are trading at 24 times one-year trailing PE (price-to-earnings ratio). Since they have severely underperformed the small and midcap space, the benchmarks have relative valuation comfort," said G. Chokkalingam, founder and head of research at Equinomics Research Private Limited.</p>
<h3><strong>Outlook for the Future</strong></h3>
<p>Nifty 50 is now up about 25% from its 52-week low level of 18,333.15, which it hit on May 26 last year. On the other hand, the Nifty Midcap 100 index is up 58%, while the Nifty Smallcap 100 index is up about 71% from their respective 52-week low levels. "The prospects of robust economic growth, relatively cheaper valuation, and FII buying will help the benchmarks sustain gains. FIIs sit on the sidelines ahead of elections, and they come back after the election outcome. FIIs are likely to come back in a big way," said Chokkalingam.</p>
<h3><strong>Conclusion</strong></h3>
<p>In conclusion, while the Nifty 50 and Sensex have shown remarkable gains, the sustainability of these gains will largely depend on political stability and continued FII interest. With the upcoming Lok Sabha elections, market volatility is expected, but the long-term outlook remains positive given India's robust economic growth prospects.</p>