In the last six trading sessions, the FPIs have bought stocks worth more than $1.9 billion.

The benchmark Nifty 50 is within kissing distance from the 10,000 points mark. The benchmark has gained 950 points in the last six trading sessions, retracing 31% of its losses since March 23.

Domestic indices rose on Tuesday, given the optimism around the exiting of the lockdown and the assurance given by Prime Minister Narendra Modi for structural reforms to strengthen the economy, and ended the day at a three-month high. The benchmark Sensex was up by 522.01 points or 1.57% to close at 33,825.53.

The 50-share index Nifty gained 152.95 points or 1.56% to close at 9,979.1, shying away from the important 10,000 mark. Financials were largely responsible for the market’s risk-on mood, driving the Nifty up the most which led to the benchmark closing at its highest level since March 11. Foreign portfolio investors (FPIs) bought stocks worth $997.5 million on Tuesday, provisional data shows.

According to market experts, the current rally in the market is not driven by fundamentals but because of the excess liquidity in the capital markets. The central banks around the world have taken measures to ensure excess supply of money in the market which is leading to a demand for stocks.

G Chokkalingam, chief investment officer, Equinomics Research and Advisory, said, “The markets are going up because of an increase in liquidity with around $9 trillion worth of stimulus given by central
banks globally. With excess liquidity in the market, there is no fundamental reason for the markets to rally but because there are investors who have funds and are sitting on them, they are turning into buyers in the market.”

He further explained that the optimism may not last long in the equity markets as Covid-19 cases will increase once the economy opens up and that the market may decline in a month or two. In his address to the Confederation of Indian Industry (CII), Prime Minister Modi stated that the government
would take structural reforms to change the course of the country and build a self-reliant India.

The Indian markets shrugged off the Moody’s downgrade that had come the day before, global ratings agency Moody’s downgraded the Government of India’s foreign currency and local currency long term issuer ratings to ‘Baa3’ from ‘Baa2’ and retained a negative outlook.

Siddhartha Khemka, head – retail research, Motilal Oswal Financial Services, said, “Investors ignored India’s ratings cut by Moody’s over slower growth and continued to cheer gradual easing of the lockdown
and good monsoon prediction. Reassurance by PM in CII’s annual session that India would return to growth boosted sentiments further. Institutional buying over past few sessions also supported the market.”

In the last six trading sessions, the FPIs have bought stocks worth more than $1.9 billion. The markets witnessed volumes worth Rs 11.79 lakh crore against the six month average of Rs 13.9 lakh crore. On the other hand, the cash market saw volumes worth Rs 60,555.38 crore against the six-month average
of Rs 43,047.1 crore.

Globally, the European markets were having a positive trading session in anticipation of another round of fiscal stimulus measures by central banks across the continent.

The stock markets in the UK, France and Germany were up between 1.05% and 2.12%, respectively. Dow Jones Mini futures were up by 151 points at the time of press. Asian markets also ended their day higher with bourses in Shanghai, Taiwan, South Korea and HongKong up between 0.20% and 1.11%, respectively. The biggest gainers on Nifty were Bajaj Finserv, Zee Entertainment, Bajaj Finance,
Kotak Mahindra Bank as well as Tata Motors which were up by 9.51%, 9.06%, 8.15%, 7.69% and 7.37%, respectively.

Shares of Kotak Mahindra Bank were up by 7.69% to close at Rs 1,344.45 a piece.