PremiumIndian stock markets closed at record high today, driven by strong gains in IT stocks and positive macro data. The BSE Sensex ended nearly 600 points higher at 55,437 while Nifty rose 1% to 16,529. Both the indexes rose for a second straight week, gaining more than 1%. Macro data points were also supportive for the markets. The July retail inflation eased to 5.59% from June's 6.26%.
Analysts also said that that regulatory crackdowns in China have led to foreign investors redirecting money into equities in India and other emerging markets.
“FPIs appear to have changed their investment strategy in August. After selling equity worth ₹11,308 crore in July FPIs have turned buyers in August. Up to 13th August, FPIs have bought equity worth ₹1,795 crore. The small figure indicates a lack of conviction on the part of FIIs in the market rally. The market is now driven by retail investors who account for 45% of cash market transactions. At least for the present, FPIs are not the leaders but followers," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"FPIs were sellers in financial services and IT in July. But these sectors are among the best performing in recent days. The outperformance of large-caps over mid and small-caps indicate institutional activity. Since markets are at record highs with stretched valuations, some profit booking by FIIs can be expected, going forward," he added.
TCS was the top performer today among the Sensex components, surging 3.2%, followed by L&T, Bharti Airtel, HCL Tech, Tata Steel, Bajaj Auto, Reliance Industries and HDFC Bank.
"Domestic main indices raised the bars, registering new highs, bolstered by favorable economic data and a strong performance by large caps like defensive sectors such as IT, FMCG and telecom. Investor sentiments were boosted as retail inflation eased to 5.59% in July from 6.26% in June owing to softening food prices. Moreover, Industrial Production rose by 13.6% YoY in June on account of good performance by manufacturing, mining and power sectors," said Vinod Nair, Head of Research at Geojit Financial Services.
Nagaraj Shetti, technical research analyst at HDFC Securities, said the near term trend of Nifty continues to be positive and the present upside breakout of narrow range could signal more upside for the short term.
“Having reached our initial upside target of 16,500 levels, the Nifty is now expected to head towards the next upside target of around 16800-17000 levels in few weeks. Immediate support is placed at 16380 levels," he said.
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