Indian equity markets kicked off the week on a strong note and extended their gains as the benchmark indices scaled new all-time highs on the opening tick on Monday on the back of positive domestic cues, formation of new government and inline RBI monetary policy.
BSE's barometer Sensex surged more than 386 points or half a per cent to 77,079.04 on Monday. Similarly, Nifty50 was seen at 23,411.90, up 121.75 points, or 0.52 per cent in the early session. Broader markets outperformed the headline indices as BSE midcap and smallcap indices rose three-fourth to a per cent each.
Last week, Nifty saw significant gains, with the Sensex hitting a historic high of 76,795.31. With Narendra Modi sworn in for a third term as Prime Minister and the RBI raising India's GDP growth projection to 7.2 per cent for FY24-25, markets are expected to trade positively, said Prashanth Tapse, Senior VP (Research) at Mehta Equities.
From a technical standpoint, Nifty positioned itself above all the significant EMAs, slightly above the higher band of the ‘Rising Channel’, showcasing an inherent bullish quotient, said Sameet Chavan, Head Research, Technical and Derivative at Angel One.
"As the benchmark settles near its all-time high, it becomes challenging to forecast the ultimate resistance zone, although 23,500 is very close by now. On the lower side, 23,000-22,800 is the zone that is likely to provide support in case of any upcoming intra-week dips for the index," he said.
On a sectoral front, only the Nifty IT index dropped about a per cent, while the Nifty metal index was the only other laggard. The Nifty PSU Bank and realty indices rallied 1.5-1.75 per cent each, while the Nifty pharma, oil & gas and auto indices were among other key gainers.
Power Grid Ltd topped among the gainers in the NIfty50 pack, rising about 4 per cent, while Cipla Ltd rose 2 per cent for the day. Adai Ports was up 1.68 per cent, while Axis Bank Ltd and State Bank of India Ltd were other key gainers in the NSE's benchmark index in the early trade.
On the downside, Tech Mahindra and Infosys dropped more than a per cent each, while LTIMindTree and Wipro cracked on similar ground. HCL Technologies, JSW Steel, TCS and Hindalco were among the other laggards among the benchmark counters.
After the roller coaster ride last week the market is likely to take a breather in the near-term. It is important to understand that the major driving force in this bull market is the Indian retail investors including HNIs. Big selling by FIIs is getting eclipsed by the aggressive buying of DIIs and retail investors, said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
FII selling on concerns of high valuations will be easily absorbed by DII plus retail buying. So, if FIIs swim against this trend, they will underperform in one of the best performing stock markets in the world. That said, retail investors should not chase highly valued mid and small caps. Safety is in largecap stocks, he said.
In the broader markets, Wardwizard Innovations and Mobility hit an upper circuit of 20 per cent, while Motilal Oswal Financial Services rose more than 15 per cent. EIH Associated Hotels and Andhra Petrochemicals gained 12 per cent each, while Heritage Foods and Black Box were up 10 per cent each.
On the downside, RattanIndia Power and Jaiprakash Associates hit lower circuits of 5 per cent each, while Satin Creditcare and Suzlon Energy dropped 4 per cent each in the early trade. IRB Infra declined more than 3 per cent each.