The benchmark Nifty 50 on Monday advanced 0.7 per cent to close at a new all-time high of 10,153.1, surpassing its previous high of 10,114.6 touched on August 1. The 30-share Sensex advanced for an eighth day — its longest unbroken gaining streak since June 2015 — to end at 32,423.8, up 151 points, or 0.5 per cent. The index is 151 points below its record level of 32,575 touched on August 1. Certain mid-cap and small indices of the BSE and the National Stock Exchange (NSE) also hit new record highs.
Global investor sentiment has remained positive after no fresh provocations by North Korea. Market players said investors’ focus has shifted to the US Federal Reserve’s two-day meeting, which begins on Tuesday.
Analysts said investors are looking for indications of the next rate hike and the announcement on trimming its balance sheet. Most economists forecast the US Fed will keep rates unchanged at this week’s meeting and raise rates only once this year, in December. The shrinking of the balance sheet will involve the US Fed taking steps towards selling off bonds and reversing the cheap money cycle it undertook nine years ago to spur the economy after the global financial crisis.
On Monday, both foreign and domestic institutional investors (FIIs and DIIs) emerged as buyers. FIIs bought shares worth Rs 420 crore, while DIIs were net buyers to the tune of Rs 126 crore. Overseas investors have been strong sellers since August amid a global risk off. The Sensex and the Nifty had come off over four per cent from their record highs in August. The indices have seen a gradual rebound amid strong buying by mutual funds and improvement in global investor sentiment.
"The market advanced and touched another historic high on firm global cues. Strength in rupee and a gradual pick-up in FII buying has increased the liquidity in the market.
The focus has now shifted to the (US) Fed policy meet. The consensus is showing status quo in interest rate while investors are keenly looking for any announcement for trimming the balance sheet,” said Vinod Nair, head of research, Geojit Financial Services.
“It was a historic day for the market as the Nifty ended at a fresh record closing high, tracking positive global cues on easing of geopolitical tensions. All eyes are on the two-day (US) Federal Reserve monetary policy meeting that will begin on Tuesday. Continued inflow in domestic funds, benign interest rate environment, stable currency coupled with favourable global cues is driving markets higher,” said Sanjeev Zarbade, vice-president–private client group research, Kotak Securities.
Among the major Sensex gainers were Bajaj Auto, which gained 3.6 per cent, followed by Hindustan Unilever (HUL) which added 2.8 per cent. Both Bajaj Auto and HUL ended at new record highs. HDFC Bank, which rose 0.6 per cent, also ended at a new all-time high. Larsen and Toubro and Coal India added around two per cent each. On the losing side were ITC, Tata Steel and ONGC, each declining about one per cent each. There were about 1.5 advancing stocks for every one declining on the BSE.
On a year-to-date basis, the Nifty is up 24 per cent, while the Sensex has gained 22 per cent. Both the indices are above their long-term trading averages.
“We are sceptical about overall index-level valuations after the strong year-to-date rally and continued earnings downgrades. We do not expect any sharp correction either as we expect the domestic flows should remain robust, which should support the market on every correction,” said Vijay Shah, head of advisory and sales, Credit Suisse Wealth Management India, in a note last week.