How the Bajaj Housing Finance IPO Propelled Sensex and Nifty to Record Heights

The Sensex and Nifty reached record highs on Thursday, surprising many market watchers. The catalyst for this unexpected surge was the Bajaj Housing Finance IPO, which played a pivotal role in driving the indices to new peaks.

Earlier in the day, the Nifty struggled to break through the 25,000 level. However, after 2 PM, the market experienced a strong rally. The Bajaj Housing Finance IPO, combined with two other IPOs that closed for subscription on Wednesday, significantly contributed to this uptrend.

Bajaj Housing Finance attracted bids worth ₹3.24 lakh crore for its ₹6,560 crore IPO. The other IPOs, Kross and Tollins Tyres, also saw robust subscription, with nearly ₹4 lakh crore of investor wealth being tied up in these offerings.

The ASBA (Application Supported by Blocked Amount) mechanism blocks the funds in an applicant’s bank account during the IPO process. If allotment occurs, the amount is debited; if not, it is freed up for other uses. This freed-up capital may have been quickly reallocated to the market, fueling the rapid rise in the Nifty and Sensex.

The rally on Thursday was largely driven by large-cap stocks such as Reliance Industries, HDFC Bank, Bharti Airtel, Infosys, and SBI, with all 50 Nifty index constituents ending higher. Additionally, the weekly expiry of Nifty 50 contracts contributed to the market’s rebound. Once the Nifty surpassed 25,200, call writers scrambled to cover their positions, leading to a sharp short-covering rally.