The Indian stock market witnessed record highs on Wednesday, driven by gains in Adani group stocks and heavyweight financials. The Nifty 50, India’s blue-chip index, reached a new peak of 18,923.10, a 0.56% increase. This comes after several sessions of struggling to breach the previous level. The S&P BSE Sensex also rose by 0.52% to reach a fresh all-time high of 63,745.57. Meanwhile, midcaps and smallcaps hovered around their respective record and 52-week highs.
In contrast to the Indian market’s positive momentum, Asian peers experienced a somber mood due to concerns over global growth, overshadowing upbeat economic news from the United States. TMSCI’s broadest index of Asia-Pacific shares outside Japan remained relatively unchanged on Wednesday.
While near-term triggers such as a revival in monsoons could provide some support, analysts cautioned that the market could consolidate again due to uncomfortable valuations. Many believe that now is the time to book profits and wait on the sidelines, as the current levels offer no valuation comfort. It is worth noting that the rally in Indian stocks has been largely driven by foreign fund inflows. Foreign portfolio investors have bought equities worth 859.83 billion rupees ($10.49 billion) in fiscal 2024, after offloading 1.4 trillion rupees and 376.32 billion rupees in FY22 and FY23, respectively.
Most sectoral indexes recorded gains, with HDFC and HDFC Bank extending their gains following the announcement of their proposed merger completion on July 1. The Adani Group’s flagship company, Adani Enterprises, emerged as the top gainer on the Nifty, experiencing a 4.6% rise due to several block deals.
In summary, Indian shares reached record highs, propelled by the performance of Adani group stocks and heavyweight financials. However, market analysts advised caution as valuations remain at uncomfortable levels. Foreign fund inflows and a monsoon revival have been supporting the market, but it is crucial to monitor the consolidation risks. With gains in sectoral indexes and the progress of the HDFC and HDFC Bank merger, the Indian stock market continues to showcase its strength amidst global uncertainties.
