The surge in both indices comes a day after the Reserve Bank of India (RBI) board approved the highest-ever surplus transfer of Rs 2.11 lakh Crore to the government for 2023-24.
On Thursday (May 23), the domestic stock market rose by more than 1 percent, Sensex rose by more than 1,000 points and Nifty crossed the 22,900 level for the first time.
During today’s trading session, BSE Sensex had reached an intraday high of 75,407.39. The 30-share index had hit 75,095.18 in intraday trades on May 3. NSE’s Nifty 50 hit a record high of 22,959.70 during afternoon trade.
The surge in both indices comes a day after the Reserve Bank of India (RBI) board approved the highest-ever surplus transfer of Rs 2.11 lakh Crore to the government for 2023-24. Market experts said the bumper payment will help the government reduce its fiscal deficit in the range of 0.2-0.4 per cent for FY2025.
“The Nifty index has hit record elevated after RBI announced a significant surplus of Rs 2.1 lakh crore to the government. This development is a significant macroeconomic positive for the market, which has a direct impact on fiscal deficit and bond yields,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
RBI’s record dividend of Rs 2.11 lakh crore is much higher than both the budgetary (Rs 1.02 lakh Crore announced in the interim Budget for FY25, including dividends from banks and financial institutions) and the market expectation of a surplus of Rs 1-1.1 lakh Crore.
According to Gaura Sen Gupta, chief economist at IDFC First Bank, the higher dividend represents additional fiscal revenue of 0.4% of GDP. Including a possible shortfall in disinvestment receipts and a moderate tax collection growth above the budget, the FY25 fiscal deficit could be 0.2% of GDP lower than the budget estimate.
A report by Kotak Institutional said that the fiscal consolidation path is now relatively easy to follow, but there is scope for variations in budgetary receipts and/or expenditure. The government may continue its capital expenditure by increasing allocations to roads, railways and defense (from their single-digit growth over FY2024RE).
