Market momentum, FPIs propel Sensex past 65,000
- Hope that the Fed might be able to end the inflation battle sooner is fuelling the rally
- With no major bearish signs, the momentum may continue, and analysts expect the Nifty to rally past 19,400 levels
Indian stocks extended their rally on Monday, led by gains in HDFC twin stocks and strong buying activity in other index heavyweights.
Buoyed by gains in the US market, local stocks saw a gap-up opening on Monday. Favourable economic data and sustained foreign fund inflows propelled the Sensex beyond 65,000, with the Nifty 50 surpassing 19,300, maintaining the bullish trend.
The Sensex, which closed above 64,000 on Friday, ended trading on Monday at 65,205.05, gaining 0.75%. With gains of 0.7%, the Nifty 50 ended the day at 19,322.55, close to the all-time high of 19,345.10 that it scaled during intraday trading.
The latest rally is being fuelled by expectations that the US Federal Reserve might be able to call off its inflation battle faster than expected, analysts said. The fear of recession is easing, supported by positive global data.
Investor sentiments were reinforced by positive domestic data and favourable global cues, according to Vinod Nair, head of research at Geojit Financial Services.
“The global market was supported by resilient economic data, avoiding the possibility of a recession,” Nair said.
Economic activities are gaining strength, with the PMI (purchasing managers’ index) level at 57.8, indicating sustained demand for products and fostering a sense of confidence in the manufacturing prospects, he said.
With no major bearish signs, the momentum in the domestic markets may continue, and analysts expect the Nifty to rally past 19,400 levels, though volatility is not ruled out from here on. The confidence in domestic markets is bolstered by the broad-based rally, in contrast to global markets that are predominantly experiencing a surge in technology stocks.
Domestic stocks witnessed broad-based sectoral gains, with banking, financials, energy, metal, and fast-moving consumer goods (FMCG) contributing to the rally. Grasim Industries Ltd, ITC Ltd, Bharat Petroleum Corp. Ltd, Bajaj Finance Ltd, and Reliance Industries Ltd were top gainers among Nifty stocks.
Metals stocks took the spotlight, with analysts attributing the rally to marginally better-than-expected China manufacturing PMI data. Additionally, the mid- and small-cap indices hit record levels.
“The overall structure of the market remains positive, with the Nifty attaining new highs at a steady pace. We expect PSU [public sector undertaking] banks to remain in focus on the expectation of healthy Q1 FY24 numbers,” said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services Ltd. Domestic equities surged higher, continuing last week’s positive sentiment amid a healthy 12% growth in goods and services tax (GST) collection at ₹1.61 trillion for June, Khemka added.
“The Nifty continues its upward movement with bulls at the helm despite selling pressure at higher levels. The trend remains bullish as the index sustained above the critical moving average,” said Rupak De, a technical analyst at LKP Securities. De added that while the support on the lower end is placed at 19,200, resistance is visible at the 19,450-19,500 zone.
Foreign portfolio investors (FPIs), which bought ₹47,148 crore in June, bought a provisional ₹1,995.92 crore on Monday. FPI flows remain key drivers for markets and may sustain for some more time, analysts said.
The June quarter has been quite good for the Indian markets as far as foreign fund flows are concerned, and the trend may continue for some more time till the valuations of the market are not stretched, said Deepak Jasani, head of retail research at HDFC Securities Ltd.
The rupee closed 8 paise stronger against the dollar at 81.95. Anindya Banerjee, vice president of currency derivatives and interest rate derivatives at Kotak Securities Ltd, attributed it to FPI inflows and a weak dollar index. Over the near term, he expects it to remain range bound between 81.65 and 82.10 on the spot.
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