The stock market index, Sensex, crossed the 55,000 mark and hit a record high on Friday, this time driven by sustained buying by retail investors and mutual funds. The NSE Nifty Index also rose by 82 points to 16,446.35. A strong rally earlier this week was attributed to positive economic data that showed signs of recovery.

The 30-share index was trading 258.4 points or 0.47 % higher at a lifetime intra-day peak of 55,102.42, while the broader NSE Nifty advanced 69.80 points or 0.43 % to record 16,434.20 in initial deals. M&M was the top gainer in the Sensex pack, rising over 1 per cent, followed by L&T, HDFC, ITC, Axis Bank and HDFC Bank. On the other hand, Tech Mahindra, Dr Reddy’s, Sun Pharma, PowerGrid and Tata Steel were among the laggards.

Also read: IRCTC announces stock split, shares zoom to an all-time high

The stocks’ rally in the past week comes after months of pessimism at the stock market, pulled down by slow growth, falling manufacturing and loss of jobs.

Why the bull run?

Experts say that retail investors and mutual funds are driving the ongoing bull rally. The retail holding of NSE-listed companies hit a record high of 7.18 % in the quarter ended June. “Retail investors are buying stocks without any serious consideration for value. Now, we don’t know when and how this rally will end. But we know it will end… and when it does, the new retail investors who have flocked to the market recently will be hit hard,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, reports The Indian Express.

Also read: Narendra Modi to Bill Gates: Meet world’s most influential left-handers

Also, helped by new fund offers and bullish stock markets, equity mutual funds are also witnessing record inflows worth Rs 22,583.52 crore in the month of July as compared to Rs 5,988.17 crore inflows in June. This money is also flowing into the stock markets.

Also read: Americans beat the COVID blues with memes as Delta variant rise in US

What next?

Experts say that given the stock market valuation is already high, retail investors must tread with caution. Any upset on the political or economic front may hit the bull run, they say. It will be a better idea if retail investors buy stocks during the correction phase as spending money at high valuations can cause losses, they add.