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On Thursday, benchmark indices rose another 0.52 percent to hit a new peak on the back of continued buying by foreign portfolio investors (FPIs). The benchmark Sensex jumped 340 points to a new high of 65,785.64 and the NSE Nifty rose 99 points to 19,497.30 in the height of the buying frenzy.
The market capitalization of BSE crossed the Rs.300,000 crore mark, closing at Rs.301.70 crore on the day.
However, analysts warned retail investors not to buy at higher valuations. Some leading indicators such as first-quarter credit growth from major banks such as merged entity HDFC Bank point to a potential slowdown in the economy. Two-wheeler sales in June indicate that demand remains an issue in rural areas. In short, the macroeconomic scenario, while good, is not so bullish as to warrant a continuation of the rally, which is already somewhat ahead of the fundamentals,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Investors should not chase low-grade, small-cap stocks at this juncture. They should remain invested in high quality caps and wait for Q1 results to determine the direction,” said one analyst. An important trend in the market is the increased participation of retail investors as evidenced by the sharp increase in new demat accounts (2.36 million) opened in June New retail investors jump into the market usually happens at the peak of a rally.“This is a sign of caution,” Vijayakumar said.
Markets rose after two days of hiatus and gained nearly half a percent. After a flat start, buying into selected heavyweights tried to push Nifty higher but profit taking at higher levels capped the momentum. I finally managed to get close to today’s highs. Meanwhile, the sectoral trend was mixed with real estate, energy and auto posting strong gains while IT and FMCG trade eased. The broader indices also saw good momentum and closed higher in a range of 0.8-1%.
FPIs bought shares worth Rs 2,641 crore on Thursday while local institutions sold Rs 2,351 crore worth of shares. “Broad participation combined with positive global signals should help keep the tone positive. Hence, we reiterate our view to focus more on stock picking and to pursue stop losses on rally for existing long positions.”
“We expect the bullish trend in the market to continue with the movement of the stocks identified. Global signals were weak due to the release of the minutes of the Federal Reserve meeting in June. “Investors will be watching the non-farm payroll and unemployment data in June. United States, which will be released on Friday.
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