Indian equities ended at record closing highs on Friday and just 60-odd points shy of life highs with FMCG and infrastructure sectors leading the rally.

Sentiments soared on strong domestic cues and hopes of an end to the relentless cycle of rate hikes with the US Federal Reserve keeping interest rates steady.

Healthy cues

Reports of the Finance Ministry meeting Moody’s Investors Services and a possible rating upgrade also aided the general optimism. Moody’s currently has a ‘Baa3’ sovereign rating on India, the lowest investment grade rating, with a stable outlook.

“Indian equities are set to make an all-time high on the back of a strong rally in global markets supported by healthy domestic cues,” said Siddhartha Khemka, Head, Retail Research at Motilal Oswal Financial Services.

This is the fourth consecutive weekly gain by the benchmark indices. The Sensex gained 466.95 points, or 0.7 per cent, to end at 63,384.58 points and Nifty50 ended 137.90 points or 0.7 per cent higher at 18,826, just shy of the 18,887.60 life high that it touched on December 1 last year.

Friday’s trading began on a firm note with the Nifty opening with a 35-point gap up, to later settle into trading in a narrow range during the first half of the day. However, the second half witnessed the index’s surge to an intra-day high of 18,864.70.

Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities, said the market is inching close to new-high on the back of steady inflows from foreign portfolio investors, mutual funds and insurance as corporate earnings in the last quarter have been better than expected and going ahead, it would improve further given the strong demand. Moreover, the US dollar has weakened after the US Fed decision to pause the interest rate hike cycle and this will make foreign investments in emerging markets, especially that of India, more attractive, he said.

Sectoral gainers

The top three gainers in the Nifty were HDFC Life (5.9 per cent), SBI Life (3.2 per cent) and Bajaj Finserv (2.4 per cent). Stocks of insurance companies were up on statements from the insurance brokers association at an event that the sector would rise 25 per cent annually till 2030, along with positive comments from industry officials.

The Nifty FMCG and Nifty Infrastructure indices hit life highs buoyed by receding inflation figures and expectations of a recovery in rural demand. The main gainers in the segment were ITC, Britannia and Emami. In the run up to the elections next year, the government’s thrust on infrastructure spend is expected to increase.

The Nifty Bank index also rose over 1 per cent led by robust gains in IDFC First Bank, Punjab National Bank, Bank of Baroda, and Bandhan Bank. The rally was broad based, and the Nifty Midcap Index ended 0.7 per cent higher while the small cap index closed 0.8 per cent higher.

Though the US Fed did indicate rate hikes going ahead, Amol Athawale of Kotak Securities said the markets had shrugged off negative global sentiments and were instead focusing on domestic cues.

“We believe that at the current juncture, there may be consolidation in the next few sessions which will give investors time to enter following a rally across indices,” said Riches Vanara, technical and derivatives analyst at StoxBox.

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