Sensex hits all-time high: Will the winners of this rally hold momentum?

Strong macros, pause in interest rates, and a rush of foreign inflows drove the S&P BSE Sensex to an all-time high level of 63,588 in Wednesday's intra-day trade, breaching the previous peak of 63,583, touched on December 1, 2022.  
 

At the same time, Nifty50 quoted 18,875 as day's high, 12 points shy of record high levels. However, other NSE indices like Nifty 500, Nifty Midcap, and Nifty Smallcap indices jumped up to 1.1 per cent to record fresh highs during the day.
 

Among sectors, the S&P Capital Goods index rallied over 18 per cent since December 1, 2022, and emerged as the leader among the pack. The S&P BSE Auto, Bank, FMCG, Metal, and Realty indices gained between 0.2-15.1 per cent, during the same period.

On the contrary, the S&P BSE IT, Oil & Gas, Power, and Telecom indices underperformed the benchmark index, declining up to 15 per cent, during the same period.
 

Going ahead, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believes that a sustained rally beyond record highs is difficult to sustain since valuations are rich. "Further rally, beyond a point, will not have fundamental support," he added.

Gainers and losers of Sensex's rally to new record high
Among individual stocks, ITC and Tata Motors have zoomed 33 per cent each since December 1, and have led the rally in the 30-pack index. Besides, Nestle India, L&T, and Ultra Tech Cement were the the top gainers.
 

Top 5 gainers between Dec 1, 2022-June 21, 2023

According to AK Prabhakar, head of research, IDBI Capital, positive capex in the economy would continue to benefit Larsen and Toubro (L&T), and Ultratech. Moreover, ITC remains an attractive bet given valuation support.

"However, it remains to be seen if the rally in Nestle India will sustain or not as El Nino concerns could throw a spanner in the works for consumption recovery," he added.

Among losers, Infosys emerged as the biggest drag on the 30-pack index, falling 21 per cent during the period.
 

Top 5 losers (Dec 1, 2022-June 21, 2023)

"IT stocks have been the major losers from the pack, but they now appear to be attractive long-term bets. Things don't seem to be panning out well for Wipro and after the buyback, there are no major triggers for the stock. TCS though will likely recover," he said, adding that most positives are already priced-in for Bajaj Finance as thus may remain an underperformer.

State Bank of India, on the other hand, can be watched out over the next one year, he added.