Investors were closely watching the January inflation data, which caused the Nifty and Sensex to fight for direction on Monday. RIL saw losses as IT and bank equities rose. Both Nifty IT and PSU indices increased by more than 1%. INVIX increased by 5%.
The fundamental strength of the market is demonstrated by the resilience of the markets even after the initial exuberance about early rate cuts in 2024, both in the US and India. In addition to favourable economic indicators, one of the main things keeping the market going is the consistent inflow of mutual funds. This may lead to buying during downturns, and the high market valuations are probably here to stay. The inflated market-wide valuations, however, are cause for alarm.