Domestic benchmark indices Sensex and Nifty hit their fresh record highs this week with frontline index Nifty50 breaching the psychological 20,000-mark on the back of strong macroeconomic indicators such as lower consumer price index (CPI) print, demand optimism in China, and hints of a pause in rate hike by the US Federal Reserve.
On Friday, September 15, Sensex closed at 67,838.63, up 320 points, or 0.47 per cent, while the Nifty settled at 20,192.35, rising 89 points, or 0.44 per cent. During the day, Sensex rallied 408.23 points or 0.60 per cent to hit its fresh all-time intra-day peak of 67,927.23.
Both indices ended at their fresh closing highs on gains led by banking, auto and IT heavyweights, including HDFC Bank, TCS and Mahindra and Mahindra. On the weekly front, the BSE benchmark jumped 1,239.72 points or 1.86 per cent, and the Nifty climbed 372.4 points or 1.87 per cent.
On the current bullish momentum, market analysts observed that India emerged as the best-performing large market in September with gains of over 4.5 per cent on several key indicators such as domestic fundamentals, success of the G20 Summit, positive global cues, and a renewed interest of foreign investors.
“India has become the best performing large market in September with 4.2 per cent gains. This move to record highs breaching the psychological 20000 mark on the Nifty has been achieved with an impressive 4.3 per cent rise in Bank Nifty. Since financials account for 32 per cent weightage in the Nifty, strength in financials, particularly the banks, can keep the Nifty resilient,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
‘’More importantly, the valuations of banking stocks are even now fair. Strength in banking stocks can impart resilience to the market even though the overall market valuations are slowly rising beyond comfort levels,” added Dr. V K Vijayakumar.
The domestically-focussed small-caps and mid-caps snapped a three-week winning streak, dragged by the sharpest single-day fall in 2023 on September 12. BSE small cap and mid cap indices, however, remained under pressure during the week with a decline of 1 per cent and 0.5 per cent, respectively, while the BSE largecap index added 1.7 per cent.
The BSE small cap index shed 1 per cent, dragged by stocks such as Zee Media Corporation, Sadhana Nitrochem, Himadri Speciality Chemical, Sarda Energy and Minerals, Alok Industries, Mrs. Bectors Food Specialities, among others.
GTL Infrastructure, Andrew Yule and Company, Central Bank of India, among others rose in the range of 20-40 per cent during the week. These three stocks also emerged as the top gainers on BSE last week.
‘’The midcap and smallcap indices faced pressure as profit-booking set in, driven by concerns of overvaluation after reaching their all-time highs. Investors are now closely focused on the upcoming data releases and central bank meetings scheduled for the next week, including decisions from the US Fed Reserve, BoE, and BoJ,” said Vinod Nair, Head of Research at Geojit Financial Services.
Where are markets headed?
Analysts observe that Nifty has been scaling new highs over the last few sessions as the sentiments strengthened post the successful G-20 execution which is likely to bolster India’s economy in the global arena. Further, lower CPI and wholesale inflation in India are comforting amidst the global inflationary scenario.
‘’Thus we expect the overall positive momentum to continue especially in the large cap while sectoral rotation is likely to be seen in the broader market. Next week, the US interest rate decision is due where Fed is expected to take a pause, which might bring relief to the global markets,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.