Sensex ends above 66K as tech stocks lead rally

Nifty too hits new record at close; positive US data aids confidence.

Ujjval Jauhari
Updated15 Jul 2023, 01:34 AM IST
Controlled US inflation raised hopes that a 25bps rate hike will be sufficient to stabilize its economy, boosting purchases of Indian technology stocks. (Hindustan Times)
Controlled US inflation raised hopes that a 25bps rate hike will be sufficient to stabilize its economy, boosting purchases of Indian technology stocks. (Hindustan Times)

Mumbai: Market momentum gained traction on Friday with equity benchmarks closing at record highs, aided by easing inflation concerns, a strong rally in information technology stocks, and continued inflows from foreign portfolio investors (FPI) providing crucial support.

The Sensex closed above the 66,000 mark for the first time, ending at 66,060.9. In intraday trade, the Sensex gained nearly 1% to touch a new high of 66,159.79. Likewise, the Nifty 50 closed at a record high of 19,564.50, after gaining 0.77% to reach a fresh high of 19,595.35 in intraday trade.

“Spectacular rally in IT stocks following better-than-expected earnings of select frontline technology companies triggered a late upsurge which propelled the Sensex to close above 66,000,” Amol Athawale, vice president, technical research, Kotak Securities Ltd, said.

Controlled inflation in the US instilled confidence, leading to a belief that a 25-basis point (bps) rate hike will be adequate to stabilize its economy, analysts said. This positive outlook resulted in significant purchasing activity in Indian IT stocks.

S&P BSE IT index surged 4.3%, while the Nifty IT index saw 4.45% upswing. Notably, robust buying was also seen in metals and real estate stocks, and most sectors ended with gains. Among the Sensex and Nifty stocks, TCS, Infosys, HCL Technologies and Tech Mahindra emerged as the top performers. Analysts said despite record high levels of the indices, the India volatility index (VIX) dipped 2.33% to fall below 11, indicating lack of market fear.

Meanwhile, mid- and small-cap stocks continued their upward trajectory, with the broader markets registering gains ranging 1.2-1.5%, supported by a third consecutive month of decline in wholesale price.

In June, wholesale prices witnessed further decline, hinting at broad-based moderation in all three major components.

“This was the steepest (annual) contraction seen in about eight years, helped by continued easing of energy, chemicals and metals prices,” said Rajani Sinha, chief economist, CareEdge.

The concerns over the US markets further eased as producer price index numbers were better than expectations, while consumer price index numbers at a two-year low on Thursday, that had boosted sentiments. “This declining trend in inflation in the mother market of US and the resilience of the US economy are the two pillars of support for global equity markets,” V.K. Vijayakumar, chief investment strategist, Geojit Financial Services, said.

The market has also been significantly impacted by a steady decline in the value of the dollar, with the Dollar index falling below 100, reaching its lowest level since 21 April 2022. “The falling dollar is favourable for emerging markets and India, as the most-favoured EM may see sustained FPI flows,” said Vijayakumar. But selling by domestic institutional investors is emerging as a countervailing force, he added.

FPI inflows was at 2,636.43 crore on Friday, taking overall FPI flows to 28,481 crore in July, and to 121,830 crore so far in 2023, according to provisional figures. DIIs were net sellers of 772.45 crore on Friday, and 7,357.02 crore so far in July.

“Going ahead, the market will watch out for the merged HDFC Bank’s results on Monday which holds 29% weightage in the Nifty Bank,” said Siddhartha Khemka, head, retail research, Motilal Oswal Financial Services Ltd. “As we fully enter into the quarterly earnings season, stock-specific action would pick up. Moreover, expectation of good quarterly results, consistent FII buying and good progress on the monsoon would keep the overall trend of the market positive,” added Khemka.

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First Published:15 Jul 2023, 01:34 AM IST
HomeNewsIndiaSensex ends above 66K as tech stocks lead rally

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