Nifty, Sensex close at new record highs; positive momentum to persist, bank, infra stocks among top bets

Certain blue chips stocks in sectors like banking, financial services, infra and allied names are still trading below their historical averages and look like favourable pockets to attract incremental flows

Indian benchmark indices Sensex and Nifty closed at fresh record highs on June 27, taking the bull run to the fourth consecutive day on the day of monthly F&O expiry. While Sensex breached the 79,000 mark, Nifty crossed 24,000 for the first time.

It was the second fastest 1,000 points move made by the 50-share index. The sharp rally in the key benchmark and the broader markets is supported by FII flows also turning in the previous 13 trading sessions, along with robust retail inflows.

The 1000-point move to 24,000 milestone was supported by the private banking sector which has been a laggard from the previous 8 quarters but a usual favourite amongst the foreign participants.

Sectorally, UltraTech Cement, Grasim Industries, LTIMindtree, Wipro and NTPC were among the top gainers on the Nifty, while losers were Shriram Finance, L&T, Eicher Motors, Bajaj Auto and Divis Lab.

Increasing buying in index heavyweights, political stability, and FIIs return into the domestic market emerged as key factors to market ascent.

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Fundamental view

Analysts expect the positive momentum to continue with confidence of a reformative budget, which will help in economic growth momentum and supported by flows from both domestic and foreign investors. Going forward, large caps with better valuations and new segments tapping the capital markets will be in focus.

Additionally, consensus building in of an imminent rate cut in the second half of the year will keep the momentum of the foreign flows in the country, as the view is that Indian equity markets can deliver much better returns compared to other emerging markets like China, Taiwan, and South Korea.

According to Jaykrishna Gandhi, Head - Business Development, Institutional Equities at Emkay Global, the confidence in the government has improved after the recent announcements point to business as usual in all significant areas like infrastructure, manufacturing, housing etc.

"A hope of a good monsoon will provide added thrust to the sectors driven by rural spends and help overall economy to move to a better growth trajectory," he said.

Certain blue chips stocks in sectors like banking, financial services, infra and allied names are still trading below their historical averages and look like favourable pockets to attract incremental flows, Gandhi added.

Technical view

"The trend for remains positive for the short term or until it breaks below 23,800. On the higher end, the index might move towards 24,200," said Rupak De, Senior Technical Analyst, LKP Securities.

The Bank Nifty index experienced volatile moves, trading in a broad range with support at 52,700 and resistance at 53,100.

"The index needs to decisively sustain above 53,000 for a continued move towards the 53,400-53,700 mark. However, it is trading in overbought territory, and failure to sustain above 53,000 could lead to a correction towards the 52,000 levels," said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

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