India July 12(IM): Domestic stock markets hit fresh lifetime highs on Thursday, thanks to upbeat investor sentiments and positive global cues. The S&P BSE Sensex surged over 400 points to register a fresh record high while the Nifty50 index crossed the 11,000 mark after a gap of five months. The Sensex surpassed its previous high of 36,443.98 recorded on January 29, 2018. At 11.59 am on Thursday, the S&P BSE Sensex traded at 36,679.16, with a gain of 413.23 points or 1.14 per cent while the broader Nifty50 was at 11,068.35, up 120.05 points or 1.10 per cent. Twenty out of 30 BSE Sensex stocks were trading higher. Reliance Industries was the top gainer on both benchmark indices. Other prominent gainers were Yes Bank, HDFC, Larsen & Toubro, BPCL, Dr Reddy's and Hindustan Petroleum. Barring IT, most sectoral sub-indices were in the green.
Five key reasons that led to record high opening of Sensex, Nifty today:
1. Correction in crude oil prices: On Wednesday, crude oil prices fell between 5-6 per cent. Viral Berawala, CIO, Essel Mutual Fund, "Overnight crude oil prices were down by 6 per cent after Libya said that exports of oil will resume. This helped the Asian shares to recover, leading to strong opening of domestic equity indices." Oil refining and marketing companies- HPCL, BPCL and IOC rallied around 4 per cent each in early trade on Nifty50 index.
A.K Prabhakar, Head of Research at IDBI Capital, said that fall in crude prices affects trade deficit. "We run a huge trade deficit because of crude oil imports. A correction of 5 per cent in crude oil prices will lift oil marketing companies, banks and autos. We were anyway close to all-time highs. Today, we are seeing an overall participation in markets," he said.
2. China-US trade war talks: The United States and China might start trade talks to resolve dispute. China and the US, being world's two biggest economies, have a huge impact on global markets. On Thursday, fresh news of trade talks led to positive trading of Asian shares. Domestic equity indices thus tracked strong Asian cues, added Mr Berawala.
3. Higher opening of Indian rupee: Indian rupee rose by 19 paise against US dollar today ahead of key macro data release. "The rise in rupee led to the strong opening of the domestic equity indices. Investors are also optimistic ahead of the release of index of industrial production (IIP)", said financial analyst Vivek Marwan.
4. Buying by foreign investors: Foreign investors (DIIs) also contributed to the strong opening of the indices today. According to provisional data from the National Stock Exchange, foreign funds bought shares worth a net of Rs. 636.27 crore, while domestic institutional investors (DIIs) made purchases worth a net of Rs. 15.33 crore on Wednesday.
5. Upside seen in banking stocks: Technical experts believe that banks will continue to surge. Dyaneshwar Padwal, AVP Technical Analysis, KIFS Trade Capital said, "Within the corrective pattern we recently observed the symmetrical triangle break out on daily chart wherein renewed strength has been observed which brings optimism for near term, as bulls have broken the intermediate psychological resistance of 11,000. In the current chart structure, Bank Nifty, on daily chart time frame, is moving in a clear uptrend. If we look at the relative rotation graph, it denotes on weekly time frame. Bank Nifty is moving in leading quadrant where relative strength and relative momentum is very high. We may expect it to continue to travel towards north, as bulls have broken the intermediate resistance of 27,000 level."