The Sensex ended the session at 63,523 with a gain of 195 points, or 0.3 per cent, while the Nifty settled at 18,857, adding 40 points, or 0.2 per cent. These were the fresh closing highs for the benchmark indices. HDFC Bank, HDFC, and Reliance Industries accounted for most of the gains.
From this year’s lows in March, the Sensex and Nifty have gained more than 10 per cent, driven by robust FPI inflows.
Strong macro indicators and optimistic growth outlook have made both domestic and foreign investors bullish on Indian equities, even as valuations have gone past historical levels.
“India’s equity market is driven largely by FPI flows, especially passive index flows. India benefits due to its strong macroeconomic outlook and corporate earnings growth, which is expected to record 14 per cent and 15 per cent growth in FY24 and FY25, respectively. This is quite attractive relative to other emerging markets, especially China,” said Pratik Gupta, CEO & co-head, Kotak Institutional Equities.
Moreover, India is seen insulated from the global economic distress and the banking crisis in the West.
Investors are cautiously optimistic about further gains amid a delayed monsoon and doubts about the trajectory of rate hikes. The lack of valuation comfort is also making them circumspect. The Sensex is trading at a trailing 12-month (TTM) price to earnings multiple of 24, as against the 10-year average of close to 18.
Shares of HDFC Bank rose 1.7 per cent and contributed the most to index gains, followed by HDFC, which gained 1.6 per cent. The market breadth was mixed with 1,822 stocks declining and 1,706 advancing. Utilities and power stocks gained the most, and their indices on the BSE rose 1.2 and 1.08 per cent, respectively.