Sensex, Nifty50 hit new all-time high for 3rd session in a row: 5 factors aiding Indian markets

The Indian markets for the third straight session touched a new lifetime high on Wednesday on the back of multiple factors, including support from heavyweights. The benchmark indices – Nifty and Sensex – settled above 18750 and 63100 levels, respectively, after surging nearly 1 per cent.

Following the benchmarks' suit, the broader markets also witnessed a bull rally as the mid-cap and small-cap gained between 0.6-1.2 per cent. Similarly, the 12-share banking index – Nifty Bank also touched a new record high at 43,231 level, up nearly 0.5 per cent today.

As many as 45 stocks on Nifty50 advanced while 4 declined and one remained unchanged today. M&M, Hindalco, Grasim, SBI Life, and Ultratech Cement were among the top gainers and IndusInd Bank, SBI, HCL Tech, and ITC were among the top losers on Wednesday.

Sectoral Support

The beauty of the current rally is that the market is finding support from new sectors every day, Santosh Meena, Head of Research, Swastika Investmart Ltd said in his comment.

Even, Sandeep Jain, Director, TradeSwift said that the demand revival in Auto has helped the index and heavyweights to surge. Similarly, support from FMCG (Fast Moving Consumer Goods) and Metals also helps the frontline indices. The former gained on lower crude and metals due to China's covid-led lockdown situation.

Each of these above-mentioned sectors has gained over 1 per cent during today’s session.

Positive Global Cues

World equity markets rallied on Wednesday as focus turned to Fed chairman Jerome Powell, who will speak later in the day to provide an outlook before the upcoming Fed meeting (in December).

A Santa rally appeared to come early for some markets, with Asian shares set for their strongest month since 1998 and emerging market stocks poised for their biggest monthly surge since 2009.

Weak Dollar

The dollar eased from a one-week high on Wednesday ahead of a speech by Federal Reserve Chair Jerome Powell, while optimism over a possible loosening in China's COVID restrictions set it on course for its biggest monthly loss in over 20 years, the Reuters report said.

The euro was one of the better performers, rising by as much as 0.3 per cent ahead of euro zone inflation data that could show the first deceleration since June last year.

Strong Domestic Fundamentals

The gaining trend is likely to continue even though domestic markets are trading at expensive valuations compared to most of our global peers, as our fundamentals are strong and we have strong support from domestic money, the market analyst Meena said.

The October (CPI) inflation came below 7 per cent, while Industrial and core sector growth are visible year-on-year. Similarly, GST collection every month has been at a new high almost every month now.

Foreign Investors’ Inflow continues

Foreign portfolio investors have rediscovered their liking for Indian equities, making a net investment of Rs 31,630 crore in November on hopes of an end to the aggressive rate hikes, and positivity about overall macroeconomic trends.

Rising expectations of aggressive rate hike cycles nearing an end on a relatively easing inflationary curve, better than expected US macroeconomics data, and resilience of the Indian economy compared to global counterparts are also driving FPI inflows.