Resuming trade after Eid-Ul-Adha holiday, domestic benchmark indices touched fresh lifetime highs, led by gains in technology, consumer durables, banks and financials. BSE Sensex pack rose more than 400 pts or nearly 0.7% to hit an all-time high of 64,414.84, while the broader NSE Nifty50 moved soared over 100 pts to trade at a fresh lifetime peak of 19,108.20
Bank Nifty set a new lifetime high at 44,666.6. Nifty, Sensex, and Bank Nifty indices previously hit this record on Wednesday. In the broader market, Midcap and small-cap shares were positive as well The Nifty 50 index has risen over 9% so far this quarter, and is on course to log its best quarter since September 2021
Overnight, Wall Street equities closed higher as sentiment improved on strong economic data. An upward revision in first-quarter GDP, surprise fall in jobless claims and positive results from US Fed's stress test helped eased recession fears. However, the data supported the view that the US Fed may keep interest rates higher for longer. Asian markets were mostly down today as lackluster industrial output data from China cast a shadow
FPI flows into Indian equities have turned positive with the change in the macro narrative. After having been net sellers of Rs 52,000 crore in Jan-Feb 2023 period, FPI flows turned into a net positive of Rs 44,000 crore to date. The recent upgrade in FY24 GDP growth forecasts by Fitch to 6.3%, and stability in rupee against US dollar and other major currencies, is likely to support FPI inflows, according to share market analysts
The short-term trend of Nifty continues to be positive. There is a possibility of more upside towards 19,100-19,200 levels in the next few sessions before shifting into consolidation/minor weakness from the highs. Immediate support is at 18,830 levels, according to Nagaraj Shetti, Technical Research Analyst, HDFC Securities
As per VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the momentum in the market has picked up again and the undercurrent has the potential to take the benchmark indices to new highs. The global support to the bullishness is coming from the mother market US where the market is resilient supported by better-than-expected Q1 GDP growth of 2% and declining weekly jobless claims
With Sensex and Nifty hitting new highs, brokerages are mixed over the prevailing market valuations. CLSA remains cautious for now, given exceedingly rich valuations, margin erosion depleting India’s relative profitability and consensus earnings growth expectations remaining too optimistic against the delivered track record. RBI is likely lagging EM central banks in the timing and scale of policy easing, and its econometric model is signalling the domestic market is 14% overbought, it said
Brokerage firm Citi said, "Equity prices have rallied in tandem, but continue to lag earnings, so valuations remain at the lower end of their historical multi-year range. We expect improved equity performance in the second half of this year, supported by potential weakness in the US dollar, rising demand in the region and increasing direct foreign investment due to US-China strategic competition"
Siddhartha Khemka, Head of Retail Research at MOFSL funds the current market valuations reasonable at 19 times one-year forward PE and cited that valuations at the previous peak touched a high of 24 times. "With monsoon kicking in and RBI taken a rate pause, the strong momentum in earnings is likely to continue. Thus at current valuations, the market is expected to continue its up move and remain buoyant,” he said
"The resilience of the US economy, which was not anticipated and discounted by the market, is the strongest pillar of support for the global markets now. In July the market trend will be influenced by auto sales numbers in June, Q1 results, progress of the monsoon and the Fed rate decision and commentary by month end. Market valuations are rich now, and therefore, investors should exercise some caution," said VK Vijayakumar of Geojit Financial Services
"Investors should remain invested in the market. Long-term investors can continue with their systematic investments. Since valuations are rich from the short-term perspective some profit booking can be considered by investors who do not have a long-term time horizon. High quality financials are even now trading at fair valuations," said V K Vijayakumar.
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