Sensex, Nifty hit record highs; Adani stocks, metals, banks soar

New Delhi: India's benchmark equity indices surged to record highs on Wednesday driven by gains in Adani group stocks and heavyweight financials. 

Robust foreign fund inflows and a revival in the southwest monsoon boosted investor sentiment, while positive global cues and narrowing of India’s current account deficit in the fourth quarter of FY23 also helped.

The Nifty index rose 0.56% to hit a record high of 18,923.10, while the S&P BSE Sensex rose 0.52% to a fresh all-time high of 63,745.57.  The mid-caps and small-caps hovered around fresh record and 52-week highs, respectively.

The Nifty and Sensex had tried to breach previous highs over the past few sessions but hawkish central bank commentary had limited any major gains.

A strong rebound in metal stocks led the rally in Wednesday along with gains in banks, consumer durables shares, auto stocks. Most sectoral indices were in the green, with HDFC and HDFC Bank extending gains after announcing plans to complete their proposed merger on 1 July.

Adani Enterprises and Adani Ports and SEZ were among the top gainers on the Nifty.

Overnight, Wall Street stocks had ended higher, data on housing, durable goods orders and consumer sentiment handily topped expectations and indicated that the US economy remains resilient despite higher interest rates. 

Deepak Jasani, Head of Retail Research at HDFC Securities said, “Upbeat economic data soothed investor worries about an imminent recession triggered by the Federal Reserve's aggressive interest rate hikes”. 

Tech megacaps, particularly those involved in AI frenzy, boosted the Nasdaq 1.8%, its largest one-day percentage jump in a month, as per Jasani.

The Nifty index has achieved a new all-time high, driven by a renewed sense of optimism, said Rupak De, senior technical analyst at LKP Securities. This rally, De said, was backed by a consolidation breakout observed on the daily chart, indicating a strong upward movement. Additionally, the Nifty index has successfully invalidated a dark cloud cover pattern on the weekly chart.

In the short term, De expects Nifty remain positive as long as it stays above the support level of 18,700. This level is significant because put writers, who provide downside protection, are actively positioned there to prevent a substantial decline in the index.

The immediate resistance for Nifty is seen at 19,000. If the Nifty convincingly breaks above this level, it may make a move towards 19,450, De added.

“The Nifty has surged to an unprecedented all-time high, propelled by the solid fundamentals of the Indian economy and the consistent stability in global cues witnessed recently," said Santosh Meena, Head of Research, Swastika Investmart Ltd. 

The current market sentiment indicates a sustained structural bull run, making it difficult to assign an immediate target to this upward trend, said Meena. However, Meena also feels that the levels of 19000–19191 could potentially serve as a resistance, which might trigger profit booking. Conversely, on the downside, the immediate support can be identified at 18700, while 18450 is expected to provide a substantial base for the market.

Meanwhile, some caution prevails on Nifty valuations, as per analysts. 

A delayed and subdued start to the monsoon and the increasing chances ofEl Nino developing has also triggered caution among policymakers, said Mitul Shah, Head of Research at Reliance Securities. During the week, the Reserve Bank of India will release the money supply, deposits, bank credit growth data. The central government will update the budget expenditure. 

On the global front US Federal Reserve Chair Jerome Powell will deliver a speech at the European Central Bank forum on Central Banking 2023. All these events will also have a bearing on the markets.