Benchmark equity indices Sensex and Nifty hit fresh all-time high, with Nifty crossing 23,000 points and Sensex crossing 75,500. Journey of 1,000 points rally from 22k to 23k took 66 days, longer than previous ones with the jump from 21,000 to 22,000 happening in just 49 sessions. The rally from 20,000 to 21,000 took 61 trading sessions, and the 19,000 to 20,000 move also happened in 52 sessions. Market made new highs ahead of election but not everything was due to elections. The rally is driven by positive global cues, record dividend announced by the Reserve Bank of India (RBI), the Sensex semi-annual review, and the strong HSBC Flash India PMI data.
| From - To | Days Taken | ||
| Jun 03, 2020 - July 20, 2020 | 10,176.20 | 11,037.90 | 34 days |
| July 20, 2020- Nov 05, 2020 | 11,037.90 | 12,131.10 | 78 days |
| Nov 05, 2020 - Nov 24, 2020 | 12,131.10 | 13,079.10 | 14 days |
| Nov 24, 2020 - Dec 31, 2020 | 13,079.10 | 14,024.85 | 26 days |
| Dec 31, 2020 - Fec 05, 2021 | 14,024.85 | 15,014.65 | 26 days |
| Feb 05, 2021 - Aug 03, 2021 | 15,014.65 | 16,146.90 | 121 days |
| Aug 03, 2021 - Aug 31, 2021 | 16,146.90 | 17,153.50 | 20 days |
| Aug 31, 2021 - Oct 11, 2021 | 17,153.50 | 18,041.95 | 29 days |
| Oct 11, 2021 - Jun 28, 2023 | 18,041.95 | 19,011.25 | 426 Days |
| Jun 28, 2023 - Sep 11, 2023 | 19,011.25 | 20,008.15 | 52 days |
| Sep 11, 2023 - Dec 08, 2023 | 20,008.15 | 21,006.10 | 61 days |
| Dec 08, 2023 - Feb 16, 2024 | 21,006.10 | 22,068.65 | 49 days |
| Feb 16, 2024 - May 24, 2024 | 22,068.65 | 23,017.00 | 66 days |
The RBI approved the transfer of ₹2, 10, 874 crores as surplus to the Central Government for the financial year 2023-24. The Reserve Bank of India (RBI) increase of dividend was after the Contingent Risk Buffer (CRB) has increased to 6.5% for FY 2023-24 from 5.5% earlier due to the revival in economic growth in FY 2022-23. Markets expected surplus transfer in the range of Rs. 75000 crores rupees to 1.2 trillion rupees. RBI putting more money in the central government's coffers has prompted questions about how best to spend this money.
The bumper pay cheque opened possibilities for many things, like lowering income tax by the new government, boosting capital expenditure, focusing on fiscal consolidation, etc. Following the news, domestic bond yields fell below 7%. A smaller quantum of borrowings by the government from the bond markets would undoubtedly keep yields reined in and leave more resources with banks who are biggest buyers. With yields trending down, banks would prefer to lend to industry rather than subscribe to bonds, which should keep a lid on deposit rates and interest rates in general, which should be good for businesses.
In the Interim Budget for FY2025, the government had set an ambitious target of bringing down the fiscal deficit target to 5.1% of GDP in FY25 from 5.8% of GDP in FY24. The bumper dividend payout is likely to help ease the FY25 fiscal deficit by around 0.2% of the GDP.
