The Sensex and Nifty both hit record levels on Wednesday.
The BSE Sensex soared to its lifetime high of 64,037.10, while the NSE Nifty surged 193.85 points to reach its historical peak of 19,011.25.
The Sensex hit its all time high with NTPC, Tata Motors, Titan, Larsen & Toubro, Reliance Industries, IndusInd Bank, Infosys, HDFC Bank and Power Grid among the major gainers.
Wipro and Tech Mahindra were the laggards.
But why is this happening? And what happens next?
Let’s take a closer look:
Why is this happening?
This occurred amid a rally in the US and European markets and fresh foreign fund inflows.
According to Business Today, Wall Street ended higher due to several factors including strong economic data, an upward revision in the first quarter GDP, a fall in jobless claims and positive results from the US Fed’s stress test.
Buying in market heavyweight stocks like Reliance Industries and HDFC Bank also added to the positive momentum in the markets.
According to CNN, India now has the world’s fourth most valuable equiity market – after the United States, China and Japan.
The outlet quoted data from Refinitiv as saying that Indian equities are now valued at $3.5 trillion – more than the UK and France stock markets combined.
Sher Mehta, director of macroeconomic research and econometrics at consultancy Virtuoso Economics, told CNN that India provides a striking contrast to Europe,”
“[In Europe] recession fears have been on the ascendant amid concerns of … persistently high inflation resulting in continued monetary tightening,” Mehta added.
“The global support to the bullishness is coming from the US, where the market is resilient supported by better-than-expected Q1 GDP growth of 2 per cent and declining weekly jobless claims,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, told Indian Express.
“Nifty made a new all-time high on June 28, triggered by buying from institutions and retail/HNI segments. Improving US economic data and hints from China about fresh stimulus measures have helped improve sentiments,” Dhiraj Relli, MD & CEO, HDFC Securities Ltd told PTI.
“After making several attempts in the past few days, Nifty finally managed to cross its previous highs. Strong institutional flows, healthy macros and robust earnings growth drove domestic market towards its new highs,” said Siddhartha Khemka, Head of Retail Research, Broking and Distribution, MOFSL.
What happens next?
According to Indian Express, the market is looking to June’s auto sales numbers, first quarter announcements, the monsoon and the Federal reserve decision on the rate.
“Nifty finally has created history by touching the 19000-landmark, making the all-time high level with bias and sentiment maintained strong. Now with near-term support of 18800 zone, one can anticipate for next targets of 19200-19250 levels with most of the frontline heavyweight stocks getting into momentum improving their bias,” Vaishali Parekh, vice president, Technical Research, Prabhudas Lilladher Pvt. Ltd, told Indian Express.
InCred Equities vice-president Gaurav Bissa told Live Mint, “The index is now expected to witness a hurdle around 19,200-19,300 levels where strong call option writing was seen in the last couple of weeks. There is also an ascending trendline resistance placed around these levels. Further upside is expected once it closes above this resistance which can then push it higher. On the other hand, immediate support stands at 16,700 where the previous swing low, as well as 21EMA, is placed.”
“Despite the pull back following a brief foray above 19,000, the close above the upper Bollinger band signals range expansion. However, visibility past 19,070-19,200 is limited at this point. Towards this end, we would be watchful of formation of exhaustion candles once in this region, though there are no signs towards the same as yet, to stay away from the upside attempts today. However, any pull back below 18,940 will have to be treated as a bear sign,” Anand James, chief market strategist at Geojit Financial Services, told Business Today.
Some experts see more upside in the offing.
Added Rahul Sharma, director and head of Technical & Derivative Research at JM Financial Services, “Next time you feel extremely pessimistic – remember that the herd is not always right and it pays to stick to your view. After all, big money is made by betting against the consensus and not with it! We believe this bull run is still on and any dips are to be used as a buying opportunity. Technically, we see 21,000 on the Nifty by this year-end.”
Global oil benchmark Brent crude climbed 0.08 per cent to USD 72.32 a barrel.
In Asian markets, Tokyo and Hong Kong quoted in the green while Seoul and Shanghai were trading lower. European markets in trading in the positive territory.
Wednesday saw foreign institutional investors (FIIs) purchase 12,350 crore of Indian equities, as per Business Today.
Foreign institutional investors (FIIs) bought equities worth Rs 2,024.05 crore on Tuesday, according to exchange data.
The BSE benchmark jumped 446.03 points or 0.71 per cent to settle at 63,416.03 on Tuesday. The Nifty climbed 126.20 points or 0.68 per cent to end at 18,817.40.
