RIL, bank stocks drive Sensex 300 pts higher, Nifty above 25,100

Indian equity benchmarks Sensex and Nifty traded higher on Thursday, lifted by Reliance Industries and financial stocks, extending a five-day rally on optimism around a potential Goods and Services Tax (GST) cut, while investors awaited the Federal Reserve’s annual symposium for clues on the path of interest rates.

At 10:05 AM, the S&P BSE Sensex traded 320 points or 0.38% higher at 82,163, while the NSE Nifty 50 gained 75 points, or 0.3%, at 25,125.

On the 30-stock Sensex pack, the shares of Bajaj Finserv, Reliance Industries, Trent, ICICI Bank and Tata Motors were leading gainers, advancing between 0.4% and 2%.

Among sectors, financials added 0.3%, leading the advance, while banking and public-sector banks indices edged up 0.2% each.

In the broader market, mid-cap stocks rose 0.3% and small-caps gained 0.5%.

Meanwhile, insurance stocks advanced after a panel of state finance ministers proposed exempting health and life insurance premiums for individuals from the goods and services tax, with HDFC Life Insurance and SBI Life Insurance each climbing about 1%.

Expert Views

An interesting trend in the market is the steady up move in India in contrast to the down trend in the U.S., said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, adding that while concerns of potential rising inflation in the U.S. is weighing on the market there, the bold reform initiatives in India and the sustained money flows into the market are imparting resilience to the market.

Investors have to be vigilant about valuations in this market, Vijayakumar said, "Despite the many headwinds, valuations are high. Out of the BSE 500 stocks, 215 are trading at PEs above 50. Large-cap valuations, though high, are justified given India’s long-term growth potential. Many midcaps have the support of strong growth. But small caps are excessively valued and, therefore, risky. Investors have to make this distinction."

On a technical basis, Anand James, Chief Market Strategist at Geojit Investments, noted that Nifty’s rally lost momentum near 25,096—the initial upside target for the previous session—and with the index now nearing the upper Bollinger band, the likelihood of consolidation increases, casting doubt on a full move toward the 25,156–25,200 zone.

"A collapse is less likely, but dips to 25000-24977 or lower may be expected before yet another upswing is attempted," said James.

Global Markets

Asian markets were mixed Thursday as investors awaited three days of policy signals from the Federal Reserve’s annual Jackson Hole symposium, where attention will centre on Chair Jerome Powell’s speech Friday for clues on the odds of a September rate cut.

Japan’s Nikkei fell 0.6% in morning trade, pulling back further from Tuesday’s record high, while chipmakers traded unevenly, with Advantest up 3% and Tokyo Electron down 2%. South Korea’s Kospi rebounded 0.9% after touching a six-week low, and China’s blue chips added 0.5%, though Hong Kong’s Hang Seng was little changed.

On Wall Street, a tech-led selloff dragged the Nasdaq Composite down 0.7% and the S&P 500 off 0.2%, with futures pointing to further weakness, Nasdaq contracts down 0.2% and S&P 500 futures slipping 0.1%.

In commodities and crypto, Bitcoin edged up to about $114,690 after hitting a 2½-week low on Wednesday, while gold eased to roughly $3,342 an ounce.

FII/DII Tracker

On the institutional front, Foreign Institutional Investors (FIIs) sold equities worth a little over Rs 1,100 crore on August 20, while Domestic Institutional Investors (DIIs) were net buyers to the tune of Rs 1,806 crore.

Crude Impact

Oil prices edged higher Thursday after U.S. government data showed sharper-than-expected draws in crude and fuel inventories, reinforcing expectations of steady demand in the world’s largest consumer.

Brent crude futures rose 13 cents, or 0.2%, to $66.97 a barrel by 0055 GMT, extending a 1.6% gain from the previous session, while U.S. West Texas Intermediate futures added 15 cents, or 0.2%, to $62.86 after a 1.4% advance on Wednesday.

Rupee vs Dollar

The Indian rupee strengthened 8 paise to 86.99 against the U.S. dollar in early Thursday trade, supported by a softer greenback and positive momentum, though gains are expected to be capped by resistance at a key psychological level.

The dollar index, which tracks the currency against a basket of peers, was steady at 98.30 after slipping 0.13% in the prior session.

(with inputs from agencies)