Powell talk powers indices to new highs, Nifty tops 25k

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The benchmark indices rose for the fifth straight session on Thursday amid positive global cues. The Nifty closed above 25,000 for the first time, rallying 1,000 points in 24 sessions, the third-fastest in the index’s history. The index has gained 10.6 per cent in the last three months. The Sensex rose 0.15 per cent to 81,867.

The upmove is despite the initial negative reaction to the Union Budget, developments on the Israel-Hamas front, deepening US-China trade tensions, uninspiring Q1 results from Indian companies and US megacap tech sell-off. “The possibility of lower interest rates going forward and liquidity are driving markets higher,” said Andrew Holland, CEO, Avendus Capital Alternate Strategies.

Broader market indices saw profit booking on Thursday, even as sectors such as oil & gas, healthcare, FMCG and energy logged gains. FPIs bought shares worth over ₹2,000 crore, provisional data showed.

Status quo

The US Federal Reserve maintained a status quo on key interest rates on Wednesday but hinted at the possibility of a rate cut at its next meeting in September. Domestic institutional investors shopped for shares worth over ₹23,000 crore in July, taking their year to date purchases to over ₹2.5 lakh crore in the cash market.

“There are so many factors that should bring the market down. The geopolitical tensions in Israel-Iran-Iraq, for one. The earnings season has not been that not great; if anything we have seen more downgrades than upgrades. Valuations remain challenging and its hard to find anything that is compelling,” Holland said.

While the valuations of Indian markets continue to remain high, fund flows could help Nifty head even higher with some intermittent corrections, said experts.

A Balasubramanian, Managing Director & CEO, Aditya Birla Sun Life AMC said solid economic fundamentals and robust earnings growth will continue to support the overall market momentum. “The significant market outperformance in recent years, however, could lead to periods of flat growth in indices such as Nifty or Sensex and test investors patience as future returns could be muted,” he said.

Nilesh Shah, MD at Kotak Mahindra AMC said investors should follow the dharma of asset allocation as per their risk appetite and significantly moderate their return expectations.

Analysts expect a range-bound market in the near term with immediate support at 24,750 levels. “Global cues have been supportive after the US Fed indicated a possible rate cut in September. We expect this positive momentum to continue going forward driven by healthy macros, India’s strong position globally and steady corporate earnings,” said Ajay Menon, MD & CEO, Broking & Distribution, Motilal Oswal Financial Services.