Nifty 50, Sensex Reach Record Highs Amid Optimism Over US Fed Policy

Indian stock market indices opened at record highs on Thursday, with the Nifty 50 surpassing the 25,000 mark and the Sensex reaching above 82,000 for the first time.

The 30-share BSE Sensex began the day 208 points, or 0.25%, higher at 81,949.68 and continued to climb, hitting a new peak of 82,129.49. Meanwhile, the Nifty 50 opened 80 points, or 0.32%, higher at 25,030.95, reaching an all-time high of 25,078.30 shortly after.

It took the Nifty 50 just 24 sessions to add 1,000 points. Additionally, the Bank Nifty index saw an increase of over 119 points, opening at 51,672.60.

Broader markets contributed to the upward movement, with the Nifty Smallcap 100 and Nifty Midcap 100 indices each rising by over 0.2%.

Sector-wise, gains were observed in the Nifty Metals, Nifty IT, Nifty Private Bank, Nifty Oil & Gas, and Nifty PSU Bank indices, while the Nifty Realty and Nifty Media indices experienced losses.

Among the Nifty 50 stocks, Maruti Suzuki, Hindalco, Coal India, JSW Steel, and PowerGrid Corporation emerged as top gainers. Conversely, Mahindra & Mahindra (M&M), BPCL, Hero MotoCorp, Sun Pharmaceutical Industries, and Eicher Motors were the leading losers.

The rally in the Indian stock market followed positive global market trends after US Federal Reserve Chair Jerome Powell hinted at a potential interest rate cut in September.

On Wednesday, the Federal Open Market Committee (FOMC) of the US central bank left benchmark interest rates unchanged at 5.25% - 5.50% for the eighth consecutive meeting, noting progress towards its 2% inflation target.

Powell indicated that if US inflation continues to decrease, "a reduction in our policy rate could be on the table" at the Fed's next meeting in September.

Dovish comments from the Fed Chair led to a rally on Wall Street overnight, with significant gains in the three benchmark indices, including Nasdaq and S&P 500.

“Largely dovish tone from the Fed, seems like they almost cut without cutting! Jerome Powell has set the bar on a September (next FOMC) cut quite low. Good for risk-on trades - equities in general. US tech rallied last night, and investor sentiment is likely to remain buoyed in India too,” said Somnath Mukherjee, CIO & Senior Managing Partner, ASK Private Wealth. He predicts positive trends for equities through the end of the year.

“While pockets of overvaluation remain, a supportive ‘beta’ backdrop is giving investors opportunities to systematically rotate out of overheated themes/sectors (defense, railways, some smaller companies) into those with greater safety margins (particularly financials),” Mukherjee added.

Technical Analysis

Deven Mehata, Research Analyst at Choice Broking, suggests that Nifty may find support at 24,950, 24,900, and 24,850. On the higher side, 25,100 could act as immediate resistance, followed by 25,200 and 25,250.

For the Bank Nifty, Mehata notes that it could receive support at 51,500, 51,300, and 51,200. Should the index advance further, 51,800 would be the initial key resistance, followed by 52,000 and 52,100.

“Indian markets are also ready to give a strong breakout above the resistance level of 25,000. Traders holding long positions can maintain and trail stop loss at 24,850 on a closing basis. Additionally, new long positions can be considered on dips near 24,900 with the mentioned stop loss,” Mehata advised.