Stock market today: Defying weak global cues, Indian stock market benchmarks—the Sensex and the Nifty 50—hit fresh record highs on Tuesday, June 25, even as the mid-cap small-cap segments faltered.
Domestic market benchmarks witnessed healthy gains even as top markets in Europe traded lower, following losses in the key US indices, S&P 500 and Nasdaq, due to a 7 percent fall in Nvidia shares.
Nifty 50 hit its fresh all-time high of 23,754.15, while the Sensex scaled its fresh peak of 78,164.71 during the session on Tuesday, June 25.
Shares of Axis Bank, ICICI Bank, and HDFC Bank ended as the top gainers in the Sensex index.
On the flip side, shares of Power Grid, Tata Steel, and Asian Paints ended as the top losers in the index.
The Nifty 50 finally closed 183 points, or 0.78 percent, higher at 23,721.30, while the Sensex ended with a gain of 712 points, or 0.92 percent, at 78,053.52. Both indices settled at their fresh closing highs.
On the other hand, the mid-cap and small-cap segments failed to mirror the trend in the benchmarks. The BSE Midcap and Smallcap indices ended 0.26 percent and 0.03 percent lower, respectively.
Due to the losses in mid and smallcap indices, the overall market capitalization (midcap) of BSE-listed firms rose barely to about ₹435.8 lakh crore from nearly ₹435.6 lakh crore in the previous session.
Why did the Sensex, and Nifty 50 hit a fresh all-time high today?
The biggest reason behind the rise in the benchmark indices on Tuesday was solid gains in the shares of banking heavyweights.
The Nifty Bank index hit its fresh all-time high of 52,746.50 before ending 1.74 percent higher at 52,606.00. The Private Bank and PSU Bank indices rose 1.70 percent and 0.13 percent respectively. Top banking stocks, including Axis Bank, ICICI Bank, HDFC Bank, and SBI rose 1-4 percent on valuation comfort.
Since banking heavyweights carry significant weight in the benchmark indices, their gains boosted the benchmarks.
“The rally in the market is driven by the large private banking stocks as they are attractively valued at this juncture. PSU banks also look attractive from a valuation perspective,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
The Nifty Bank index is up almost 9 percent year-to-date, while the Nifty 50 has gained over 9 percent in the same period.
“Most of the private banking stocks had missed the upsurge seen in recent weeks, and hence there was a flurry of activity in the financial space ahead of the monthly expiry on Thursday,” Prashanth Tapse, Senior VP (Research), Mehta Equities, observed.
Factors such as the prospects of a healthy monsoon, a solid macro outlook, and expectations of policy continuity after the new government took charge also contributed to underpinning market sentiment.
Technical factors
Shrikant Chouhan, the head of equity research at Kotak Securities, pointed out that a bullish candle on daily charts and higher bottom formation on intraday charts indicate a continuation of an uptrend wave shortly.
“For the trend-following traders now, 23,600/77,500 would act as a trend decider level. As long as the index trades above the same, positive sentiment will likely continue,” said Chouhan.
“On the higher side, 23,835-23,900/78,500-78,700 would be the immediate resistance zones for the bulls. However, below 23,600/77,500 uptrend would be vulnerable. Below the same, trades may prefer to exit out from the trading long positions,” said Chouhan.
Technical charts indicate Bank Nifty index may rise further.
According to Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, the Bank Nifty index broke above the resistance of 52,000, where the highest open interest was built up on the call side.
“The index is trading in a strong uptrend with higher highs and higher lows intact on the daily chart. The support now stands at 52,000, and intraday dips should be viewed as a buying opportunity for targets of 53,000/53,500,” said Shah.
Where is the market heading?
Overall, experts are positive about the Indian stock market for the medium term due to the country’s healthy macro outlook. As the elections are over now, the next big trigger for the market is the Union Budget, which is expected in July.
Besides, expectations of rate cuts by the end of this year are another factor that can boost the market.
“A favorable Budget can further boost the market, which has already touched new highs since the election results were out. Investors are also looking forward to rate cuts by the central bank,” Sarvjeet Singh Virk, the co-founder and managing director of Shoonya by Finvasia.
“If the Fed cuts rates, foreign investors will turn towards the equity market, and India, one of the brightest spots now, will attract them further. Moreover, with rate cuts, both demand and supply can surge, boosting the business environment and the economy,” said Virk.
But the rising valuation of the Indian stock market can spoil the party.
“All equity segments—large-caps, mid-caps, and small-caps—are trading at the higher end of their TTM (trailing 12-month) P/B (price-to-book) ranges, indicating subdued returns in the coming year,” Nitin Bhasin, the head of institutional equities at Ambit.
Bhasin pointed out that large caps are relatively inexpensive. However, there is a significant divergence in valuations between BFSI and non-BFSI sectors.
“Currently, the Nifty Ex-BFSI universe trades at an all-time high premium of 44 percent over BFSI on a 12-month forward P/E (price-to-earnings) basis, compared to a five-year average of nearly 6 percent,” said Bhasin.
“We do not anticipate market multiples sustaining, as FY25 is expected to normalize earnings trajectory estimates,” Bhasin said.
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