Banking stocks propel Sensex past 78,000, Nifty50 gains 184 points

Sustained foreign helps indices log best day in over than two weeks

The benchmark Sensex on Tuesday went past the 78,000-mark for the first time amid sharp gains in private sector lenders, which have high weightage in the index. Sustained buying by foreign portfolio investors (FPIs) and gains in Reliance Industries (RIL) boosted sentiment and helped the benchmark gauges log their biggest single-day gains in two weeks.

The Sensex ended the session at 78,053, with a gain of 712 points, or 0.9 per cent, while the Nifty50 index finished at 23,721, a gain of 184 points, or 0.8 per cent. Both the Sensex and the Nifty climbed new highs both on intra-day as well as closing basis.

Bulk of the Sensex gain was driven by top weight HDFC Bank, ICICI Bank and Axis Bank. The three private sector lenders rallied over 2.3 per cent amid optimism around strong credit growth, benign asset quality, and healthy margins. Also, their underperformance to their public sector peers prompted many ‘buy’ calls from analysts.

FPIs were net buyers to the tune of Rs 1,176 crore, according to provisional data from the exchanges. Foreign investors have been net buyers for most trading sessions this month, pumping in a cumulative Rs 14,828 crore.

Analysts said the buying interest in private banks and the hope of market-friendly policies continuing have improved the FPI investment tally. Private banks have also been trailing sectors like automobiles and metals in terms of gains this year. On a year-to-date basis, the Nifty Private Bank index has risen 5 per cent, against a 35.6 per cent rise in the Nifty Auto index and 23.6 per cent in the metal index.

“The banking sector has done very well. Some private banks had some concerns about how they would fare in changed circumstances like mergers and rejigs in management. However, the situation has stabilised, and they are poised for growth. Now there is hope about the budget being growth-oriented, and there is more room for the market to go higher,” said UR Bhat, co-founder of Alphaniti Fintech.

Better macroeconomic indicators also boosted domestic equities. According to data released by the Reserve Bank of India (RBI) on Monday, India recorded a current account surplus of $5.7 billion, or 0.6 per cent of the gross domestic product (GDP), in the March quarter. It is India's first record of a current account surplus in 10 quarters.

"There is no major negative right now, and all the macro numbers are positive. Until there is a major negative news flow, the upward trajectory will continue. Markets are expensive and overtly exuberant, but as long as people make money, they will continue to invest," said Ambareesh Baliga, an independent equity analyst.

The market breadth was mixed, with 2,149 stocks declining and 1,747 advancing. The broader Nifty Midcap 100 and Smallcap 100 indices also hit new highs intra-day but finished off day’s highs. Going forward, the Union budget and the corporate results for the June quarter will determine the market trajectory. Investors will also be tracking the macro data from the US and China, and the statement of a US Fed official this week for further cues.