Capital market stocks rallied up to 7.23 per cent as investor sentiments in India’s equity market improved owing to a mix of global and domestic cues
Shares of Capital Market companies such as BSE Ltd, and Central Depository Services (CDSL). Nuvama Wealth Management shares and other capital market stocks rallied up to 7.23 per cent on Friday, March 21, as investor sentiment improved in the domestic market.
Typically, when the market gains, there is an increase in investor confidence, which leads to higher trading activity. This, in turn, can potentially benefit capital market companies such as stock exchanges, depositories, and wealth management firms, as they earn revenue from trading and transactions. Generally, more market activity means more business for these firms.
Shares of BSE Ltd led the rally, gaining 7.23 per cent to Rs 4,802.05 apiece. UTI Asset Management Company shares also surged 6.78 per cent to 1,056.25 per share, and Nuvama Wealth Management shares jumped 6.31 per cent to 6,373.35 apiece.
Similarly, registrar and transfer agent KFin Technologies and securities depository services provider CDSL rallied between 4 per cent to 4.5 per cent.
Stock broker Angel One, wealth and asset management firm 360 ONE, and power trading bourse Indian Energy Exchange (IEX) shares also surged between 3 per cent to 3.5 per cent.
Stock brokers Anand Rathi and Motilal Oswal Financial Services, asset management companies such as Nippon Life India Asset Management and HDFC Asset Management Company along with commodity trading bourse Multi Commodity Exchange (MCX), and Registrar and transfer agent Computer Age Management Services (CAMS) also closed in green.
The Nifty Capital Market index, which tracks the movement of stocks from the Nifty 500 Index representing the capital market theme, surged 3.27 per cent in today's session. This is the fifth consecutive day of gains for the index, which has climbed nearly 14 per cent during this winning streak.
The rally in capital market stocks has come amid improving investor sentiment in the domestic equity market.
The domestic benchmark indices ended the week on a positive note, showing consistent recovery. The BSE Sensex and NSE Nifty 50 closed the week with gains of 4.17 per cent and 4.25 per cent gains, respectively.
The broader market indices also mirrored the benchmarks, registering their fifth consecutive session of gains. For the week, the Midcap 100 index gained a remarkable 7.74 per cent, its best weekly performance since April 2020, while the Smallcap 100 index soared by 8.64 per cent, its strongest weekly gain since June 2020, said Devarsh Vakil, Head of Prime Research, HDFC Securities.
Vinod Nair, Head of Research, Geojit Financial Services, explained that the expectations of lower risk-free rates, along with a decline in the dollar index, are helping fund flows back to emerging markets.
Nair added that Foreign Institutional Investors (FIIs), who had been selling recently, are now turning into net buyers, driven by dovish signals from the US Federal Reserve, which suggest the possibility of two rate cuts this year.
This has reignited optimism in the domestic market, according to Nair.
Despite global uncertainty from escalating trade tensions, improving domestic macroeconomic indicators, valuation corrections, and anticipated earnings growth are encouraging investors to seek bargains, he said.