Sensex consolidates at 67,000-mark; Nifty less than 1% away from 20K

The benchmark Sensex finished above the 67,000 mark for the first time, while the Nifty50 index neared the 20,000 (it’s less than 1 per cent away) milestone as domestic equities continued to charge ahead amid sustained inflows from foreign portfolio investors (FPIs).

Strong overnight gains in the US equities and advances in the European market on optimism that inflationary pressures are easing, continued to boost investors' appetite for riskier assets. Strong corporate results by Wall Street firms also kept the mood buoyant.

After climbing to a high of 67,171, the Sensex finished at 67,097, with a gain of 302 points, or 0.45 per cent, over the previous day's close. The Nifty50 ended the session at 19,833, rising 84 points or 0.42 per cent. 

Reliance Industries contributed the most to index gains as its stock added another 0.6 per cent to close at a fresh all-time high of Rs 2,840. Wednesday was the last day to buy the stock to be eligible to receive shares of Jio Financial Services.

On the day, FPIs were net buyers to the tune of Rs 1,165 crore, while domestic institutional investors were net sellers worth Rs 21,134 crore.

The easing of inflation in the UK enthused investors and added to the expectations that rate hikes by central banks in the developed world are ending. The UK consumer price index rose 7.9 per cent in June against 8.7 per cent in May, the first fall in five months and the most significant drop since July 2021.

"The inflation in the UK was the biggest positive today. And that adds to hopes that inflation is coming down globally, not just in the US. The narrative in the US has gone from two hikes to inflation coming down slowly," said Andrew Holland, chief executive officer, Avendus Capital Alternate Strategies.

Asian Development Bank (ADB) retained its India growth forecast of 6.4 per cent in the current financial year and 6.7 per cent in the following one further boosted sentiment. The tepid recovery in China is also putting India back on the radar as a bright spot of growth during global economic distress.

"Downgrades to China worry exporting countries like South Korea and Taiwan. Therefore, India is getting back on the radar. Earnings have been good, and commentaries have been positive. No one is talking about pressures in volumes or margins. It's early days, though," said Holland.

However, Holland added that stimulus measures might make investors look at China favourably again. "The big stimulus from China, depending on the size of it, could make people relocate to China."

On Wednesday, the market breadth was favourable, with 1,998 stocks advancing and 1,413 declining on the BSE. The combined market capitalisation of BSE-listed stocks rose by Rs 1.5 lakh crore to Rs 304.5 trillion.

From this year's lows, the Sensex and the Nifty50 have now rallied more than 17 per cent. Technical analysts believe the markets could rise if they sustain above some key levels.

"The index has formed a higher bottom formation on intraday charts, which indicates a further uptrend from the current levels. We believe that the positive sentiment will likely continue as long as the indices hold 19,725/66,700 levele, respectively. Above the same, the markets could rally till 19,950-19,975/67,500-67,650. On the flip side, dismissal of 19,725/66,700 could trigger a short-term correction," said Shrikant Chouhan, head of equity research at Kotak Securities.

NTPC, which rose 2.8 per cent, was the best-performing Sensex stock. The stock rose after Goldman Sachs initiated coverage and noted that the company is in the best position to leverage the renewable energy transition and onset of a peak power deficit.