Sensex Breaches 80,000-Mark for the First Time

The story of Indian stocks in recent weeks is one of remarkable ascension. After surpassing several key milestones, Indian shares hit fresh all-time highs early on Friday. The benchmark indices have set new records for the third consecutive session, with the Sensex now crossing the 80,000 points level and the broader Nifty index looking at the 25,000 mark. Both benchmarks have already exceeded the expectations, with further gains anticipated. The real question is to what extent the rally will continue.

Sensex’s Rapid Climb

The Sensex added the last 10,000 points in less than seven months, first hitting 70,000 on December 11, 2023. Since a sharp slump on election results day, the index has risen by an impressive 7,000 points. From 78,000 to 79,000 points, the Sensex made the jump in just two trading sessions. On Friday, the index opened at a new record high of 79,458, soaring further to 79,672 points. This period saw 23 stocks gaining, while seven delivered negative returns.

Top Performers and Underperformers

Over the past six months, Mahindra & Mahindra has emerged as the top performer among BSE Sensex constituents, delivering an impressive return of 74.49%. This growth is largely due to strong demand in both its automotive and farm equipment sectors. Power Grid Corporation of India follows with a robust return of 37.12%, benefiting from its efforts to expand and modernise power transmission infrastructure. Bharti Airtel has achieved a return of 35.58%, driven by strategic investments in network expansion and 5G technology. Tata Steel has gained 30.59%, supported by increased global steel demand and cost optimisation strategies. Finally, State Bank of India, with a return of 28.69%, has strengthened its position through digital banking initiatives and improved asset quality.

Conversely, consumption-oriented stocks such as Asian Paints, Titan, and ITC underperformed during the Sensex’s journey from 70,000 to 80,000 points.

Continuous Milestones

The Nifty index marked a record in 14 out of 15 sessions since June 7, with Monday being the only exception. The rally has been driven by positioning ahead of the budget, with expectations of tax reforms and pro-growth announcements. However, this surge also indicates an increased risk of a market correction if the government fails to meet these expectations.

Market Sentiment and Trends

At 09:30 am IST, the S&P BSE Sensex was up 366.17 points, or 0.48%, to 79,807.62, while the Nifty 50 gained 118.05 points, or 0.49%, to 24,241.90. Both indices clocked all-time highs of 80,039.22 and 24,292.15, respectively, in early trade.

The broader market also saw gains, with the S&P BSE Mid-Cap index adding 0.51% and the S&P BSE Small-Cap index rising 0.64%. The S&P BSE Small-Cap index hit an all-time high at 53,398.75. Market breadth was strong, with 2,228 shares rising, 796 shares falling, and 107 shares unchanged. Despite this, foreign portfolio investors (FPIs) sold shares worth Rs 2,000.12 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 648.25 crore on July 2, 2024.

Banking Sector Leads the Rise

The historic rise was led by HDFC Bank, the country’s largest private lender, which jumped to a record high on expectations of an increase in its weightage in a key global index. HDFC Bank rose 3.5% at the open, leading Nifty 50 gains. Other significant gainers included ICICI Bank, Kotak Mahindra Bank, Bajaj Finance, IndusInd Bank, Bharti Airtel, and Nestle, while laggards included Tata Consultancy Services, Sun Pharma, Infosys, and Tata Motors.

Conclusion

As Indian stocks continue to set new records, investors remain cautiously optimistic. The forthcoming Union budget and global economic conditions will play crucial roles in determining the sustainability of this bull run. The strong performance of large-cap stocks, supported by foreign institutional investors, suggests a robust market sentiment. However, with the market’s heightened expectations, any deviation from anticipated reforms could trigger a correction. The market’s trajectory in the coming weeks will be closely watched, as it navigates through Union Budget announcements and global developments.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.