Market reaches 66K, giving up early gains as it does so.

NEW DELHI: Sensex and Nifty climbed to record highs on Thursday but gave up most of its early gains in the second half due to profit-booking in the banking and auto space. The 30-share index Sensex for the first time crossed the psychological mark of 66,000, while the broader Nifty50 went above 19,500.

The bullish sentiments in the street were strong amid a drop in consumer inflation in the US for June. This has raised fresh hopes among investors that the US Federal Reserve may hit a pause button on future rate hikes even as they maintained a hawkish stance in their last policy meet.

The decent Q1FY24 earning show put up by IT major TCS also played a major role in supporting the market rally. Sensex, after hitting a lifetime high of 66,064, settled 165 points higher to end at 65,559 on Thursday. Nifty reached an all-time peak of 19,567 in the first half but closed merely 30 points higher at 19,413. Bank and Auto stocks dragged the indexes from their highs.

“Bulls in the IT sector (after TCS results) have pulled the Nifty 50 index to an all-time high. Strong FII flows and the fundamental strength of the economy along with a China Substitution strategy are at the root of the market move we have been witnessing for the last 30-odd days. Foreign Investors have invested a total of USD 17 bn till now in the current financial year,” said Shobhit Mathur, Senior Director, Kotak Cherry.

Commenting on the IT stocks, Vinod TP, research analyst at Geojit Financial Services, said that while Q1 numbers may be muted, this trend is expected to reverse in the coming couple of quarters. “Indian IT companies are able to sustain margins, and order book size is growing. Recently, the US dollar has started to weaken due to rapid moderation of US inflation, which is likely to be a benefit for Indian IT services making them competitive in the current cost-centric scenario,” said Vinod.

In the Nifty 50 pack, Infosys and TCS led the rally along with Bajaj Finance, Hindalco, and LTIMindtree. Powergrid, Coal India, UPL, and Maruti Suzuki were the major laggards. Global markets also remained robust on Thursday with Japan’s Nikkei gaining up 1.49%. China and Hong Kong stocks also jumped while European stocks extended gains to a fifth day.