Leading equity benchmarks surged 1% in Thursday’s trading amid a global ‘risk-on’ rally, with the Sensex crossing 66,000 for the first time and the Nifty rising past 19,550. However, a sell-off in the last hour of trade saw indices pare most of their gains after hotter-than-expected domestic inflation got local investors anxious.
The Sensex topped 66,064.21, beating the previous all-time high of 65,898.98. The index closed at 65,558.89, up 164.99, or 0.25% from the previous close. The Sensex had posted a closing high of 65,785.64 on July 6.
The Nifty rose to its new high of 19,567.00, surpassing 19,523.60 on July 7. The gauge closed at 19,413.75, up 29.45 points or 0.15% from the previous close. The Nifty’s record closing is 19,497.30.
“We are at the cusp of strong growth coming back,” said A Balasubramanian, managing director and chief executive officer, Aditya Birla Sun Life AMC. “Our markets have more steam left and continue to see more gradual upticks.” Balasubramanian said India’s indicators at a macro and micro level are showing consistent improvement, encouraging global investors to allocate funds. “Fundamentals are getting affirmed and look more appealing. Global money will continue to flow,” he said.
Overseas Markets
The mood in markets overseas also reflected positive sentiment. Major indices in Asia rose 0.6-2.6% on Thursday after the US inflation print for June registered lower-than-expected at 3%, the smallest year-on-year increase in two years.
European shares also reacted positively to the US inflation report and lower-than-expected contraction in the UK’s economy. The pan-European Stoxx 600 index ended 0.6% higher, extending gains to the fifth straight day.
In US, Wall Street indices continued to rally. At the time of going to press, Dow Jones was up 0.11%, S&P 500 was up 0.54% and the Nasdaq Composite was up 1.10%. Overnight, the Nasdaq and S&P 500 had closed at their highest level since April.
According to the CME FedWatch tool, even as traders see a 95% certainty of a quarter-point rate hike in July, odds of the second quarter-point increase in subsequent months dropped to 13.3% after Wednesday’s inflation data from 22.3% a day prior.
The US Fed Fund rate stands at 5.0-5.25% and odds of rates rising another 50 basis points (bps) from current levels declined to 26.5% from 36.2% on Tuesday.
“The inflation report is a validation that US Fed’s policies are having the desired effect that inflation has fallen while growth has not yet stalled,” said George Mateyo, CIO, Key Private Bank.
At home, foreign portfolio investors (FPIs) turned net buyers of Indian shares on Thursday after the string of 10 successive days of purchases ended Wednesday. Overseas funds purchased shares worth a net Rs 2,237.93 crore in the cash segment, showed provisional stock exchange data. Since the lows of March 2023, FPIs have been net buyers of shares worth nearly Rs 75,000 crore.
Selling by domestic institutional investors caused the markets to pare gains on Thursday. Local institutions sold shares worth Rs 1,196.68 crore, data showed.
Mid- and small-cap indices also surged to new highs. The gauge comprising technology services companies was the biggest gainer. Private lenders as well as non-bank lenders, metal and property stocks also contributed to gains.
However, market breadth favoured the bears, with 581 stocks rising against 1,221 stocks declining.
India VIX – a measure of the market’s anticipation of price fluctuations in the near-term – was flat and hovered around multi-year lows at 10.94.
