On Thursday, the Sensex and Nifty unexpectedly closed at all-time highs, driven by an IPO that sparked a rally no one had anticipated. Surprised?And it was an IPO that sparked this rally. Surprised?
For much of the day, the Nifty struggled to cross 25,000 . However, after 2 p.m., the market experienced a dramatic, one-way move.
The Bajaj Housing Finance IPO sparked a tremendous market rally, bringing the Sensex and Nifty to record highs. The IPO received a significant subscription of ₹3.24 lakh crore, suggesting strong investor interest. This high demand reflected a strong belief in the company’s future possibilities, encouraging increased market participation. Furthermore, the increase in liquidity from institutional and individual investors fueled buying in important industries, particularly large-cap businesses like Reliance Industries, HDFC Bank, and Infosys. A successful IPO combined with favorable market sentiment helped boost the indices to all-time highs.
The Bajaj Housing Finance IPO, which closed for subscribers on Wednesday, was a major factor in Thursday’s increase. Bajaj Housing Finance received bids for ₹3.24 lakh crore for their IPO, with a target of raising ₹6,560 crore.
Kross and Tollins Tyres, the other two IPOs that were offered for subscription, received a strong response as well. The IPOs blocked about ₹4 lakh crore of investor capital.
According to the ASBA procedure, when one applies for an IPO, the sum in question is blocked in the bank account and cannot be utilized elsewhere. When the IPO allotment is made, the sum is debited, and vice versa.
In the event of no allotment, the money blocked in the bank account is instantly released for usage. That freed-up capital could have been deployed in the market, causing the Nifty and Sensex to rise sharply.
The surge on Thursday was primarily driven by large-cap stocks. Reliance Industries, HDFC Bank, Bharti Airtel, Infosys, and SBI were the major contributors to the Nifty’s gains, even though all 50 index constituents ended the day in positive territory..
Thursday also marked the weekly expiry of the Nifty 50 contracts, which contributed to the rally. Once the Nifty passed 25,200, the call writers began scurrying for cover, causing their shorts to be squeezed, resulting in a very sharp short covering move.
Also Read: Sensex, Nifty 50 Hit Record Highs: These Index Names Contributed to Sharp Recovery
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