Sensex, Nifty again hit record highs, supported by private bank, IT stocks

Analysts expect markets to consolidate in the coming days ahead of Q4 earnings season

Domestic frontline indices the Sensex and the Nifty wiped off intra-day losses and edged higher on April 4, supported by gains in private banking and technology stocks. While analysts maintain a bullish bias, they warned some hiccups ahead of the fourth quarter earnings season.

The Sensex was up 350.81 points or 0.47 percent at 74,227.63, and the Nifty was up 80.00 points or 0.36 percent at 22,514.70. The market breadth was in favour of gainers — around 2,337 shares advanced, 1,352 shares declined, and 115 shares were unchanged.

Earlier in the day, the Sensex and the Nifty scaled an all-time high of 74,501 and 22,619.

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Analysts at ICICI Securities advised investors to buy quality stocks on dips ahead of earnings season. "We reiterate our positive bias and expect the Nifty to gradually head towards 22,900 in coming weeks. Over the past three session, the index is undergoing healthy retracement and this would set the stage for next leg of up move," they said.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, too, said the market is likely to consolidate in the coming days and start responding to Q4 results.

"Market expects good results from autos, capital goods, telecom and select pharmaceuticals. Financials,too, will report good results despite some NIM compression and, therefore, are likely to be favoured by investors. IT results will be tepid and, therefore, the management commentary will be more important than the results," he added.

Meanwhile, broader markets swam in the positive territory as Nifty Midcap 100 and Nifty Smallcap 100 indices gained up to 0.5 percent. India VIX, which measures volatility over the next few days slipped over a percent to 11.2.

Sectorally, Bank Nifty, which carries around 38 percent weightage in benchmark Nifty gained over a percent led by HDFC Bank. The gain came after the private sector lender shared robust business update for the quarter ended on March 31, 2024.

On the flipside, Nifty Oil & Gas was the worst performer weighed by ONGC and Oil India. This underperformance came after the Indian government raised its windfall tax on petroleum crude for the fifth time since February to Rs 6,800 a metric tonne from Rs 4,900.

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Moving forward, all eyes will be on the Reserve Bank of India's (RBI's) monetary policy decision on April 5. A Moneycontrol poll showed bankers and economists predict a status quo in key rates, and the majority of them expect the MPC to retain its policy stance of withdrawal of accommodation.

Market participants will keenly watch out if there is a change in RBI's stance. Currently, its stance is of withdrawal of accommodation. An accommodative stance would indicate tilt towards a rate cut, while a neutral stance would hint that a rate action can happen on either side.

Other metrics like inflation trends, liquidity measures, and GDP growth target will also be watched out on April 5.