Sensex hits 66,000 for first time: Key factors behind the stunning market rally

Sensex@all-time high: The equity market scripted yet another history on July 13 (Thursday) as the benchmark index, the S&P BSE Sensex, breached the crucial 66,000 mark for the first time. The index hit a high of 66,052.11 levels during the day. On the NSE, the 50-share index Nifty was trading at 19,554.25, up 170 points, or 0.88 per cent. The index hit a high of 19,566.65 intraday.

"Encouraging global support as well as better than expected quarterly earnings from domestic companies propelled the Sensex and Nifty to fresh record highs. Stocks like Infosys, TCS, HDFC Bank, and Reliance Industries are the pillars supporting the markets. The fresh rally has come even as rising inflation remains a concern. Traders should maintain some caution while taking any fresh position, although the overall undertone is still bullish. We believe global markets will be highly focused, and investors believe the Fed will give markets incentives by hitting a pause on future rate hikes following the recent microeconomic data points," said Rakeshh Mehta, chairman at Mehta Equities Ltd.

"Technically speaking, Nifty’s technical landscape is now suggesting a desired consolidation with interweek support at the 19,171 mark. For index, the immediate hurdles are placed at the 19,577 mark and then at the 20,000 mark, while the 200-DMA is placed at the 18,017 mark. Overall, Nifty aims to reach 20K in the near term," Mehta added.

Here's a list of factors that drove the indices higher today.

Moderation in US consumer prices: US consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside. In the 12 months through June, the CPI advanced 3 per cent, compared with Reuters estimates of 3.1 per cent. This moderation in US consumer prices has given hope that the Federal Reserve could hit the brakes on its interest rate hike cycle sooner than previously thought. Earlier this week, several US central bank officials said that the end to the Fed's current monetary policy tightening cycle is getting closer.

Buying in financials and tech stocks: Heavy buying was witnessed in critical counters such as financials and technology stocks. At the time of filing this report, the S&P BSE Information Technology index was trading 2.39 per cent higher at 30,196.27 levels, while the S&P BSE TECK index was ruling 2.11 per cent higher at 13,614.07 points. Besides, the S&P BSE Financial Services was trading 0.97 per cent higher at 9,597.29 points.

Robust buying by FIIs: Foreign institutional investors (FIIs) continued to pour money into the domestic stock market. Equities witnessed a net infusion of nearly Rs 22,000 crore in the first week of July due to the resilience of the domestic economy amid an uncertain global macro backdrop. If this trend continues, investment by FPIs in July will exceed the figures recorded in May and June, which were Rs 43,838 crore and Rs 47,148 crore, respectively, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Positive chart patterns like higher tops and bottoms are intact as per the daily timeframe chart for the Nifty, and present weakness could be in line with the new higher bottom formation at the highs. On a move below 19,300, the market is likely to find another important support at 19,100–19,000 levels. Fresh buying interest could only emerge with a decisive move above 19,500 levels, Nagaraj Shetti, Technical Research Analyst, at HDFC Securities, said on Wednesday.