Indian Stock Market Surges as Sensex and Nifty 50 Hit Record Highs Driven by Banking Stocks

On June 25, Indian stock market benchmarks, the Sensex and Nifty 50, hit record highs despite weak global cues. The Nifty 50 reached a new high of 23,754.15, and the Sensex peaked at 78,164.71, while mid- and small-cap segments saw declines.

Gains in major banking stocks, including Axis Bank, ICICI Bank, and HDFC Bank, were significant contributors to the benchmarks’ performance. Conversely, Power Grid, Tata Steel, and Asian Paints were the top losers in the Sensex index.

The Nifty 50 closed 183 points higher at 23,721.30, and the Sensex ended 712 points up at 78,053.52, both settling at fresh closing highs.

However, the BSE Midcap and Smallcap indices fell by 0.26% and 0.03%, respectively, resulting in only a slight increase in the overall market capitalization of BSE-listed firms to ₹435.8 lakh crore from ₹435.6 lakh crore the previous session. The rise in the benchmark indices was primarily driven by substantial gains in banking stocks, reflecting their attractive valuations.

The Nifty Bank index also hit a new high of 52,746.50, closing 1.74% higher at 52,606.00. Private Bank and PSU Bank indices rose by 1.70% and 0.13%, respectively.

Banking heavyweights like Axis Bank, ICICI Bank, HDFC Bank, and SBI saw gains of 1-4%, significantly impacting the benchmark indices. The banking sector’s robust performance, supported by valuation comfort, was a major driver of the market rally.

Technical factors also played a role in the market’s upward movement. Analysts noted that bullish candles on daily charts and higher bottom formations on intraday charts indicate a continuation of the uptrend.

The key levels for the Nifty 50 and Sensex are identified as 23,600/77,500, which are critical for maintaining positive sentiment. Resistance zones for the indices are projected at 23,835-23,900/78,500-78,700.

Looking ahead, experts remain optimistic about the Indian stock market’s medium-term prospects due to a solid macro outlook and the recent election results. The upcoming Union Budget in July and potential rate cuts by the central bank are expected to further support market sentiment.

Additionally, favorable global economic conditions, such as potential rate cuts by the Federal Reserve, could attract foreign investors to the Indian equity market.

However, rising valuations could pose a challenge. The Indian stock market is currently trading at the higher end of its trailing 12-month price-to-book ranges, indicating possible subdued returns in the coming year.

While large caps remain relatively inexpensive, there is a notable valuation divergence between BFSI and non-BFSI sectors. Analysts caution that market multiples may not sustain as earnings trajectories normalize in FY25.