The prospect of slower monetary tightening as early as December has given further impetus to the recent rise in risk on domestic equities, helping to extend gains to the eighth consecutive session. Technology, cement and some banks led the rise.
Sensex rose above 63,500 and Nifty approached levels of 18,900, although gains were limited as analysts said the market rally could falter in the near term.
Sensex closed at a record high of 63,284, up 184 points or 0.29% from the previous close. It hit a new intraday high of 63,583. Nifty advanced 54 points, or 0.3%, to close a new high of 18,812. The index hit a new intraday high of 18,887.60.
“Momentum looks overheated and some cooling is needed for the foam to stabilize,” said Viraj Vyas, Technical and Derivatives Analyst – Institutional Equities, Ashika Group. “This will help maintain the positive tone of the market in the short to medium term.” Vyas expects Nifty to reach the 19,000-19,500 levels by the end of December.
Foreign portfolio investors (REITs) sold Indian stocks with a net worth of ₹1,565.93 crore on Thursday, preliminary stock market data showed. In November, they were buyers to the tune of ₹38,250 crore. Their domestic counterparts, however, bought shares worth ₹2,664.98 crore in the cash segment on Thursday.
Other Asian markets also rose on Thursday, boosted by the overnight rise in U.S. stocks. The market, however, took the Fed’s warning that it had “more ground to cover” in monetary policy tightening in its stride. Most of the region’s major averages advanced 0.5-1%, anticipating rate hikes of 50 basis points or less in December and the coming months compared to the 75 basis point hikes in the past four previous occasions.
The main averages across Europe rose in the range of 0.2 to 0.8%. The Stoxx Europe 600, a pan-European gauge, ended up 0.74% at press time.
“We tell clients to keep 25-30% cash and be selective in taking a sector rotation and portfolio rotation approach,” said Roop Bhootra, Managing Director – Investment Services, Anand Rathi Shares and Stock brokers. “We are bullish on the IT sector which has started to rebound from lows and also reasonable valuations. Sectors like banks will also continue to perform.”
Bhootra believes the recent market rally has been too fast and expects a minor correction that will provide a buying opportunity. “We expect the Nifty to test 19,200 to 19,500 by March 2023,” Bhootra said.
With the exception of oil and gas, power, banking and autos, all other sector indices finished in the green. Market breadth was strong, with rising stocks outnumbering falling ones on the NSE by 1.56 to 1.
Broader markets outperformed front-line stocks with the NSE Midcap 100 index up 0.8% and less than 3% from its all-time high of 33,243.50 on October 19 last year.
On Thursday, the VIX, a measure of traders’ expectations of short-term market risk, fell 3.25% to close at 13.36. The VIX had hit a high of 33.97 in March, when the US Fed raised its key rates for the first time.