The country's foreign exchange reserves have probably crossed the level of $ 600 billion. This can be beneficial for the domestic stock markets. According to experts, due to the availability of sufficient liquidity in the capital markets of the country and abroad, the domestic stock market may continue to rise. It told that the country's foreign exchange reserves have increased by $ 105 billion this year.
In May, the country's largest stock exchange National Stock Exchange (NSE) had an average daily turnover of Rs 79,000 crore. A year before that i.e. in 2020, the average daily turnover in NSE was Rs 65,000 crore. The daily trading average of the exchange in 2019 was around Rs 36,000 crore.
Experts say that the investment of youth in the domestic stock market has increased rapidly. The period of strength in the domestic stock market is not going to end in the near future. According to brokerage firm Motilal Oswal Financial Services, the special package of Rs 15,000 crore given by RBI to the hospitality sector strengthened the stock market on Friday.
The Reserve Bank has announced special packages for travel and tourism companies, tour operators, hotels, restaurants, aviation companies, spa clinics, and beauty parlors. Therefore, the shares of companies related to these sectors jumped on Friday. Shares such as United Breweries, Globus Spirits, United Spirits, IFB Agro Industries, and Radico Khaitan gained up to 8%.
Motilal Oswal Institutional Equities has said in its report that there was a consolidation in the market in the first month of the new financial year. NSE's benchmark index Nifty jumped 6.5% on a monthly basis to close at an all-time high of 15,583 points in May, down 0.4% on a monthly basis in April.
The Nifty has gained 11.5% since January, due to various reasons. Foreign institutional investors poured in heavily in the last fortnight of May. There has been a steady decline in new cases of Covid infection. During this time, other Asian stock markets also strengthened.
According to the brokerage firm's report, in May, foreign institutional investors (FIIs) have invested $ 700 million (Rs 2,067 crore) on a net basis. During this period, domestic institutional investors (DIIs) were net buyers for the third consecutive month and made a net investment of $ 300 million (Rs 2,067 crore). In the last 12 months, the Midcap has gained 94% while the Nifty has gained 63%.
Active cases of Covid have decreased by more than 50% since May 9. This month, the state governments will gradually start removing the restrictions imposed due to Covid. All this will have a positive impact on the market, though Nifty is trading at a higher valuation of 17.9 times the FY2023 estimated EPS. In such a situation, the increase in the profits of the companies has not been according to this, the market will give a negative reaction.
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