Nifty 50 hits record high on boost in financial, IT stocks

Benchmark Nifty 50 index surged to a historic peak on Thursday, propelled by a significant dividend transfer from the central bank to the government, which bolstered financial stocks amidst optimism about the country's fiscal outlook.

The blue-chip NSE Nifty 50 soared by 1.16 per cent to reach 22,860.65 points, marking an all-time high. Concurrently, the S&P BSE Sensex also climbed by 1.01 per cent to 74,973.76, as of 1:52 pm.

The Reserve Bank of India approved a record surplus transfer of Rs 2.11 lakh crore to the government for fiscal year 2024, surpassing government projections.

"The Reserve Bank of India's record dividend will have a compounding effect on expenditure and consumerisation of the economy, which is a huge positive for equity markets," stated Deven Choksey, managing director at DRChoksey FinServ.

The substantial dividend from the RBI is anticipated to bolster the government's cash reserves, particularly benefiting banking stocks, analysts noted.

Financials, representing the heaviest-weighted sector in the Nifty 50 index, rebounded strongly by 1.33 per cent, reversing a 0.82 per cent decline witnessed over the previous two sessions. State-owned banks surged by 2 per cent.

Leading private lenders Axis Bank AXBK.NS and IndusInd Bank exhibited robust gains of 3.6 per cent and 2 per cent, respectively, positioning them among the top five Nifty 50 gainers.

While the Nifty 50 had previously attained a record high in early May, uncertainty surrounding India's general elections and foreign sell-offs had elevated volatility to nearly two-year highs. Nevertheless, sustained domestic buying has helped mitigate losses.

"High inflows from mutual fund investors through the systematic investment plan-route will continue to be the norm," added Deven Choksey.

Conversely, metal stocks declined by 0.45 per cent, impacted by a strengthening US dollar following hawkish Federal Reserve minutes.

Power Grid Corporation of India witnessed a 2.6 per cent decline after reporting a drop in profits for the March quarter. Similarly, Sun Pharmaceutical Industries dropped by 3 per cent after missing revenue estimates for the same period.

Both Power Grid and Sun Pharma emerged as the top losers in the Nifty 50 index for the day.

(With Reuters inputs.)