Sensex, Nifty hit new record highs; what’s boosting markets despite tepid global cues?

Indian equities in Monday’s trade continued their upward trajectory and marked a fresh record high on both the benchmark indices ignoring tepid global cues. Sensex clinched levels over 76,000 levels for the first time hitting new all-time high of 76,009.68, while Nifty easily breached levels of 23,100 to mark a new peak of 23,110.8. Meanwhile, broader markets continued to exhibit their outperformance, with Nifty Midcap 100 also logging a fresh high of 52,847.85.

Here are the likely factors that triggered gains today:

Investor optimism about Lok Sabha elections 2024 fuels run-up:

Despite Wall Street being closed on Monday for Memorial Day, confidence remains high among Nifty buyers, bolstered by investor optimism about the general elections. Prashanth Tapse, Senior VP (Research), Mehta Equities is of the view that Nifty traders should gear up for a week of potential volatility driven by six big catalysts: Exit Poll (June 1st), May F&O expiry (May 30th), US GDP (May 30th), India’s GDP (May 31st), US PCE Inflation (May 31st), and May Auto Sales (June 1st). 

FIIs aggressively selling seen to halt:

FIIs have net sold Indian equity worth Rs 22,046 crore in May, which severely weighed on Indian market sentiment. Nonetheless, as a positive trigger, FII selling has declined sharply and they even turned big buyers on Thursday.

"The bumper dividend payout of Rs 2.11 lakh crore from RBI to the central government for the fiscal year would have caused FPI to reconsider its strategy and temporarily halt selling. Estimates suggest that the payout could bring about some positive changes,” Vipul Bhowar, Director, Listed Investments, Waterfield Advisors added.

Frontline banking stocks look promising:

Even though Nifty is near record highs, Bank Nifty is 2 per cent away from its peak. This indicates the potential of frontline banking stocks to move up further, reasoned V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

As we move into the last week of trade before election results the market is near record highs. Sharp short covering in index futures and huge delivery based buying in frontline stocks like HDFC Bank have contributed to the strength of the market, Vijaykumar added.

Crude oil price:

In Monday’s early Asian trade, oil prices largely remained steady as markets awaited the outcome of the OPEC+ meeting scheduled on June 2. Nonetheless, as WTI crude futures fell to nearly $77.85 levels, the Indian equities are registering buoyancy as a fall in crude prices generally augurs well for the Street.

Technicals:

Upsides look limited, with oscillators getting overbought. But collapse conditions are yet to ripen, and hence favour continuation of ongoing uptrend, though a slow down or consolidation also is equally favoured, notes Anand James, Chief Market Strategist,Geojit Financial Services.