Sensex, Nifty hit 8-month highs as banks, auto stocks rally

Mumbai: Indian equities extended their sparkling pre-Diwali run on Wednesday, with the Sensex and Nifty closing at their highest levels in nearly eight months, supported by gains in heavyweight banking and auto stocks amid a recent easing in crude oil prices.

The Sensex and Nifty ended 0.84% and 0.95% higher, respectively, to 25,255 and 81,880. Both gauges closed at their highest levels since February 26 – a day before the start of the Iran war.

However, they pared some gains toward the latter half of the day, having surged as much as 1.7% and 1.52%, during intraday trade.

Utsav Verma, head of research – institutional equities, Choice, said some profit booking was expected after the sharp market rally, particularly in the absence of fresh triggers. “Most of the major catalysts are now behind us. The US elections are over, crude oil prices have eased and most of the corporate results have been announced. There may be some profit booking as investors take money off the table after such a sharp move. I would not read too much into it,” Verma said.

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The benchmarks have gained on 10 of the past 12 trading sessions. During this period, the Sensex has risen 8,755 points and the Nifty has gained 2,655 points, with both indices advancing around 12%. Foreign investors have bought nearly $7 billion worth of Indian equities during the rally.

Mahindra & Mahindra was the biggest gainer among Nifty stocks, rising 5.3%, followed by IndiGo and Trent, which gained 4.3% and 3.3%, respectively. Among heavyweight stocks, HDFC Bank, Maruti Suzuki India, ITC, Hindustan Unilever and Bharti Airtel rose around 2% each. Among sectoral indices, the Nifty PSU Bank index led gains, rising 3%, followed by the Nifty Auto and Nifty Bank indices, which advanced nearly 2% each. Nifty Metal, Nifty FMCG and Nifty Oil & Gas gained around 1% each. On the other hand, Nifty IT declined 0.5%, while Nifty Pharma and Nifty Realty fell 0.4% each.Read more: Smallcap mutual fund inflows drop 29% MoM to Rs 6,407 crore in October. Should investors be cautious or continue investing?

Sunny Agrawal, head of research, SBI Securities, said short-covering had contributed significantly to the recent rally. Short positions, which were earlier close to three lakh contracts, have declined to around 90,000 contracts, he said.

Meanwhile, Asian equities advanced for a third consecutive session, supported by gains in technology stocks.