Breaking Down Nifty’s Historic Surge to 20K Unveiling the Secrets Behind Foreign Fund Selling

Mumbai: As ordinary investors continue to buy equities through mutual funds, the Nifty hit the 20,000-point milestone for the first time on Monday thanks to vigorous purchasing by domestic funds. The conclusion of the G20 leaders’ conference successfully in Delhi also improved the mood of investors on Monday.

Later in the Monday session, the markets gained traction. The Nifty reached a new all-time high of 176 points when it finished at 19,996. The Sensex finished the day up 528 points at 67,127. The index is just 500 points away from its all-time high, which was reached on July 20 of this year at 67,619 points.

According to Shrikant Chouhan of Kotak Securities, India’s strong growth in the face of global macroeconomic difficulties has given investors the confidence to keep bullish wagers and propelled Nifty above the 20K milestone. The seventh session of gains has occurred despite ongoing selling by foreign investors and other unforeseen factors like inflation, a strengthening currency, spikes in US treasury yields, and concerns about interest rate hikes.

According to CDSL and BSE data, foreign portfolio investors have net sold equities worth roughly Rs 3,000 crore so far this month, down from a net buying total of Rs 12,262 crore in August.

According to market participants, domestic buying was the primary driver of Nifty’s rise over the previous few weeks. According to Sebi statistics, between August 1 and August 23, mutual funds alone net acquired equities worth close to Rs 14,500 crore. The data for the upcoming two weeks has not yet been released.

NSE data showed that from Nifty’s launch in November 1995 at 1,000 points, it has generated an annualized return of around 14%. The index had its worst year ever in 2008, when the global financial crisis hit, losing 51% of its value. However, the index had its greatest year ever the year after, exceeding its previous best year of 77% in 2003 with a gain of over 78%.

NSE data shows that in the previous 24 years, Nifty has only experienced five years of negative returns.

In terms of investor engagement in the market, India has advanced significantly over the past 30 years, claims Ashishkumar Chauhan, MD & CEO of NSE.

“We still have a ways to go…Like in the past, the road moving forward will have its ups and downs. Markets will continue to reflect India’s progress, as evidenced by the Nifty, in the coming years. A “fair, efficient, transparent, orderly, low cost, highly automated market” will be made available to investors worldwide, the NSE CEO further pledged.

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