E-PaperStock Market Today: What drove the Sensex, Nifty 50 to fresh highs- explained with 5 reasons
Stock Market Today: Sensex breached the coveted 80,000 mark for the first time ever, hitting its all-time high of 80,074.3 during the session. The Nifty 50 also scaled its fresh peak of 24,309.15.
Stock Market Today: Indian stock market benchmarks- the Sensex and the Nifty 50 - clocked healthy gains on Wednesday, July 3, hitting their fresh record highs during the session and ending their day at fresh closing peaks.
Sensex breached the coveted 80,000 mark for the first time ever, hitting its all-time high of 80,074.3 during the session. The Nifty 50 also scaled its fresh peak of 24,309.15.
Sensex finally closed 545 points, or 0.69 per cent, higher at 79,986.80, while the Nifty 50 closed 163 points, or 0.67 per cent, higher at 24,286.50.
As many as 40 stocks ended in the green in the Nifty 50 index.
Shares of Tata Consumer Products (up 3.55 per cent), Adani Ports (up 2.39 per cent) and Kotak Mahindra Bank (up 2.23 per cent) closed as the top gainers in the Nifty index.
On the flip side, shares of TCS (down 1.23 per cent), Titan (down 1.11 per cent) and Reliance Industries (down 0.68 per cent) closed as the top losers in the index.
The gain was broad-based as the midcap and smallcap indices also hit their fresh highs.
The BSE Midcap index closed 0.86 per cent higher at 46,802.84 after hitting its fresh record high of 6863.01. The BSE Smallcap index closed with a gain of 0.86 per cent at 53,441.93 after hitting a fresh record high of 53490.12.
The overall market capitalisation of the firms listed on the BSE rose to nearly ₹445.6 lakh crore from nearly ₹442.2 lakh crore in the previous session, making investors richer by over ₹3 lakh crore in a single session.
Also Read: Sensex’s rapid rise: From 75,000 to 80,000 in just 58 sessions – a look at its journey so far
Over 330 stocks, including HDFC Bank, Federal Bank, JSW Steel, HDFC Asset Management Company, ICICI Lombard General Insurance Company, Persistent Systems, and Zomato, hit fresh 52-week highs in intraday trade on the BSE.
“The market has reached another milestone. We believe this is logical as markets are leading indicators of macro stability and future growth. We believe that India has strong and sustainable drivers for secular growth, and thus, our view on equities remains constructive. We advise investors to follow a well-crafted and balanced allocation towards equities, and remain committed preferably via SIP,” said Neelesh Surana, Chief Investment Officer, Mirae Asset Investment Managers (India).
Five key factors that drove the Sensex and Nifty 50 to fresh highs
1. Positive global cues
Strong gains in major Asian and European markets influenced sentiment back home. Japan's Nikkei rose 1.25 per cent, while Hang Seng clocked a gain of 1.16 per cent. Among the European markets, France's CAC 40 jumped over 1.5 per cent and Germany's DAX rose over a per cent during the session.
The rise in global markets could be attributed to Federal Reserve Chair Jerome Powell's dovish comments, which fuelled hopes that rate cuts are closer. Investors waited for the last Federal Reserve meeting minutes to get cues on when the US central bank could start its rate-reduction cycle.
2. Solid gains in banking, financial stocks
Shares of HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, and SBI ended as the top five contributors to the gains in the Sensex index in that order. Banking stocks hold significant weightage in benchmark indices, and strong gains in them naturally boost the key indices.
HDFC Bank led the recovery due to a potential increase in its weightage in the MSCI Emerging Markets index.
According to Nuvama Alternative & Quantitative Research, at present, HDFC Bank’s weight in the MSCI EM Index is approximately 3.8 per cent. If FIIs reduce their holding from 55.5 per cent to below 55 per cent, there could be a significant weight change from 3.8 per cent to 7.2 per cent to 7.5 per cent, potentially leading to inflows of $3.2 billion to $4 billion.
Moreover, several experts believe that large private sector banks have comfortable valuations at the current juncture and strong fundamentals. This may attract buying interest from domestic as well as foreign investors.
"With Indian banks' GNPAs dropping to a 12-year low, the sector is anticipated to outperform in the near term," said Vinod Nair, Head of Research, Geojit Financial Services.
Nifty Bank index hit its fresh record high of 53,256.70 and closed 1.77 per cent higher at 53,089.25. The Nifty Private Bank index jumped 2.02 per cent, while the PSU Bank index rose 1.06 per cent. The Nifty Financial Services index jumped 1.80 per cent.
According to Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, the Nifty Bank index trades in a strong uptrend with higher high and higher low formations on the daily chart. The immediate support now stands at 52,500, and a dip towards this support would be an ideal opportunity to initiate fresh long positions.
3. Rate cut hopes
Hopes of rate cuts were reinvigorated after Fed Chair Powell's dovish comments in which he said the US was on a disinflationary path.
US monthly inflation remained unchanged in May. The personal consumption expenditures (PCE), which the Fed closely tracks to assess inflationary trends, remained unchanged for the first time in six months.
Powell, however, has not given a clear timeline for rate cuts but market experts expect the US central bank may go for a first cut in September.
"The US Fed chair's commentary on inflation cooling down to 2 per cent by the end of CY25 was sentimentally positive. FOMC minutes later today might give hints on the start of the rate-cut cycle," said Nair.
4. DII support
Domestic investors have consistently bought Indian equities since August last year, even as foreign flows have been unstable.
After selling in April and May, FIIs became net buyers in June, buying Indian equities worth around ₹2,037 crore. On the other hand, DIIs bought Indian equities worth ₹28,633 crore.
5. Technical factors
Shrikant Chouhan, Head Equity Research, Kotak Securities, observed that after a gap-up opening, the market comfortably traded above the 24,200/79,600 resistance level, which is largely positive.
On intraday charts, it is holding higher high and higher low formation, which supports a further uptrend from the current levels, Chouhan pointed out.
"We are of the view that, as long as the index is trading above 24,200/79,600, the bullish structure is likely to continue. Above the same, the market could rally up to 24,400/80,200. Further upside may also continue, which could lift the index up to 24,500/80,500. However, below 24,200/79,600, the texture could change," said Chouhan.
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