Sensex hits record-high at 75,000, RIL and ITC fetches massive gains

The benchmarks for Indian stocks closed the trading session on Wednesday at record highs thanks to gains in index heavyweights Reliance Industries and ITC as well as expectations for earnings. For the first time, the BSE Sensex ended above the 75,000 level, closing at 75,038 at the end of the session, up 354 points, or 0.5%. With a gain of 111 points or 0.5%, the NSE Nifty 50 closed at 22,754.

Bullish sentiment in the domestic equities markets was ascribed by analysts to prospects of political and economic stability as well as strong macrodata recently. However, in the aftermath of hotter-than-expected US inflation data that was released after Indian market hours and implied that the Federal Reserve would delay lowering interest rates, sentiment is likely going to become more cautious.

“It (the US inflation data) should not have a big impact on our market, but investors will have to live with a higher longer-term interest rate for the short term. A rate cut in June by the Fed is probably off the table, but there is probably more data to come. Even as bond yields rise, the markets are not taking it too badly,” stated Andrew Holland, CEO at Avendus Capital Alternate Strategies.

“After the shakeout in mid-March, there was a rally in quality names, which has given confidence back to the market,” added Holland.

“The two sectors everyone is looking at are IT and banking. If an IT company’s commentary says the worst is over, it will trigger a rally. And if banks say the NIM (net interest margin) compression is behind them, it will give a lot of confidence. And if banks continue their rally, that could be the extra leg markets need because of banks’ weighting in the index,” Holland further elucidated.

With 1,904 stocks rising and 1,939 decreasing on the BSE, the market breadth remained neutral. Over two-thirds of Sensex stocks experienced gains. The best-performing Sensex stock was ITC, which increased by 2.5 percent, followed by Kotak Mahindra Bank, which increased by 2.4%. International portfolio investors accounted for a net purchase value of Rs 2,778 crore, while domestic institutions purchased shares valued at Rs 163 crore.

 “Overall, we expect the market’s ongoing uptrend to continue, with the Nifty being just 265 points away from crossing the 23,000 mark. The broader market, too, is likely to continue its outperformance, along with stock-specific action, on the back of strong domestic flows and healthy business updates,” mentioned Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.