Sensex hits fresh all-time high; here’s what propelled the rally

The domestic benchmark index BSE Sensex hit a fresh all-time high of 63,588 in intraday trade on Wednesday after nearly seven months, supported by sustained foreign fund inflows into Indian equities amid favourable trend of key economic indicators of the country. The NSE Nifty also hovered around its record high level, which was earlier seen in Nov’22 end. Last Friday, the Sensex and Nifty closed at fresh lifetime highs of 63,385 and 18,826, respectively.

The 30-share Sensex opened higher at 63,467 against the previous closing price of 63,328, despite a mixed trends across Asian markets following a lower close on Wall Street overnight. During the session so far, Sensex surged as much as 261 points, or 0.4%, to touch a new record high of 63,588 mark, led by gains in index heavyweights, including Reliance Industries, heavyweights, including Reliance Industries, Power Grid Corporation of India, HDFC twins, Bharti Airtel, and Larsen & Toubro. In the calendar year 2023, the Sensex has risen nearly 4%, while it surged nearly 21% in the last one year.

Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS says, “Sensex touched the all-time high mark, and Nifty 50 is a few points away from the all-time high level, which was earlier seen in Nov’22 end. The Indian market has seen a solid rally in the last couple of months, especially in the mid and small-cap space, led by positive FII flows, robust economic growth vs. other EM countries, strong earnings outlook, robust demand across the sector, the banking sector in better shape, and private capex cycle expectations.”

Kulkarni says the Indian economy stands at a sweet spot of growth and remains the land of stability against the backdrop of a volatile global economy. “We continue to believe in the long-term growth story of the Indian equity market, supported by the emerging favourable structure, as increasing Capex enables banks to improve credit growth. Our base case Dec’23 Nifty target is at 20,200 by valuing it at 20x on Dec’24 earnings,” he adds.

Retreating from all-time high, the BSE Sensex was trading at 63,492, up 164 points, or 0.26%, at the time of reporting. The top five stocks that topped the gainers' chart were Power Grid Corporation of India, HDFC Bank, HDFC, Bharti Airtel, and Larsen & Toubro, which rose in the range of 1-3%.

On the sectoral front, power and PSU indices were top performers, while metal and realty sectors were among top laggards. In the power space, JSW Energy, CG Power and Industrial Solutions, Power Grid, Adani Green Energy, and NHPC were notable gainers, whereas SJVN, HUDCO, REC, Power Finance topped the PSU index.

Overall, the market breadth, indicating the overall strength of the market, was positive, with 1,987 shares advancing out of the total traded 3,762 shares. While 1,633 shares declined and 142 were unchanged, at the time of reporting.

In a similar trend, the NSE Nifty touched intraday high of 18,876 after opening higher at 18,849 levels. The broader market also witnessed a positive trend, with midcap and smallcap indices rising as much as 1% and 0.8%, respectively.

“Sensex rallying to all-time-high is in tune with the global rally in stock markets. Most markets are at 52- week highs. Last year, global markets had corrected discounting a U.S. recession early this year and its impact on global growth and corporate earnings. But this didn’t happen and markets are compensating for this overreaction of last year,” says V K Vijayakumar, chief investment strategist at Geojit Financial Services.

“In India, a sustained rally beyond the record highs is difficult since valuations are rich. Further rally, beyond a point, will not have fundamental support,” he adds.

Apurva Sheth, head of Market Perspectives & Research, SAMCO Securities says the pace of the market rally has slowed down over the last few weeks, however the underlying momentum is still strong. “We believe that traders can lighten up their long leveraged positions and book some profits in the immediate term. But medium to long term investors must continue to hold on to their positions and use dips to buy more.”

According to Sheth, the pause in interest rates from both the U.S. Federal Reserve and the RBI is a major sign of relief for corporates paying interest cost through their nose. Private and government capex is also at all-time highs which should boost infrastructure spending. This will have a ripple effect and fuel growth.

“We are just months away from India and U.S. elections. We believe the positive momentum should continue as governments generally tend to do everything in their control to keep the market participants happy in order to be re-elected to power,” he says.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)