Sensex hits record high, Nifty at new 1-year high: Factors behind the rally

The 30-pack S&P BSE Sensex index claimed a fresh record high of 62,412.33 in the intra-day trade on Thursday, surpassing its previous high of 62,245, hit on October 19, 2021. With this, the frontline Sensex index has logged a new high in the last six straight calendar years.

The NSE Nifty50, on its part, is just 121 points away from claiming new lifetime peak. It's last registered record high was in October 2021, at 18,604. 

The benchmark indices were primarily lifted by information technology (IT), and financials stocks with Infosys (up 3 per cent), HCL Tech, Wipro, Tech M, and TCS sitting among the top 6 Sensex gainers. Others included Power Grid, HDFC, HUL, Sun Pharma, M&M, and Nestle. 

Among sectors, the Nifty IT index jumped 2.6 per cent, while Nifty FMCG and Financial Services index gained little over 1 per cent. The Nifty Bank index, which settled 0.8 per cent higher, had hit a record high of 43,163.4 during the day. 

"The positive global developments led to a firm start in our equity market, and gradually the benchmark index kept surging upward on the expiry session. The broad-based buying has uplifted the overall market sentiments, which certainly portrays the urge of the bulls of D-Street while favorable conditions," said Osho Krishan, senior analyst - Technical & Derivative Research, Angel One.

Ajit Mishra, vice president - Technical Research at Religare Broking, meanwhile, added that markets have reclaimed buoyancy, and we expect the tone to continue. "However, investors shouldn't go overboard and continue with selective buying. The banking and IT pack look firm to us while others are seeing a mixed trend. We reiterate our preference for index majors and quality midcaps, and suggest focusing more on overnight risk management," he said.

Here're the top factors that cheered the bulls today:

US Fed's dovish commentary: Global stock markets jumped on Thursday after minutes of the US Federal Reserve's November policy meeting hinted at a possible moderation in the pace of interest rate hikes as they evaluate the impact policy is having on the economy.

"A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate," the minutes stated.

Though some officials said they ssee few signs of inflation abating, they expressed concern about risks to the financial system should the Fed continue to press forward at the same aggressive pace.

With this, markets widely expect the rate-setting Federal Open Market Committee to step down to a 0.5 percentage point increase in December, following four straight 0.75 percentage point hikes. READ HERE

Strength in rupee: The domestic currency appreciated by nearly 22 paise, or 0.27 per cent, to end at 81.63 per US dollar, inviting capital flows from foreign investors. 

So far in the month of November, foreign portfolio investors (FPIs) have pumped in Rs 27,396 crore in Indian equities, after selling equities worth Rs 8 crore, and Rs 7,624 crore in October and September, respectively. 

Dip in 10-year bond yields: The yields on 10-year government securities eased Thursday, too, in-line with US treasuries, as possible slowdown in rate hike by the US Federal Reserve rekindled hopes of smaller interest rate hikes by the Reserve Bank of India as well. 

A key market indicator of interest rates — the overnight indexed swap (OIS) — suggests that the central bank may tighten policy by 35 basis points and then refrain from further rate hikes. The six-member Monetary Policy Committee (MPC) of the RBI will meet on December 5-7. READ MORE

Technical indicators: Equity markets gained momentum in the last half-an-hour, ending the monthly derivatives (F&O) expiry on a high note. According to Nagaraj Shetti, technical research analyst at HDFC Securities the Nifty witnessed an excellent upside breakout on Thursday, and closed the day with hefty gains of around 216 points after 6-7 sessions of consolidation.

"A long bull candle was formed on the daily chart, which indicates an attempt of sharp upside breakout of the crucial resistance around 18,400 levels. This also signals an upside breakout of the range movement of the last two weeks. Positive chart pattern like 'Higher Top, Higher Bottom' continued on the daily chart, and the recent swing low of 18,133 could now be considered as a new higher bottom of the sequence," he said.

The immediate resistance of 18,400 has been taken out on the upside, and the Nifty is expected to form a new all time highs in the short-term. Immediate support is placed at 18,400.