By Bharath Rajeswaran and Vivek Kumar M
(Reuters) -India’s main stock indexes are likely to climb towards record highs in July, powered by sustained domestic inflows, macroeconomic fundamentals and strength in blue-chip companies such as Reliance Industries , two brokerages said on Friday.
The Nifty 50 rose 2.9% in the June derivatives series that expired on Thursday, while small-caps and mid-caps gained 5.1% and 3.1%, respectively.
The Reserve Bank of India’s policy support, an uptick in economic growth, moderating inflation and robust domestic inflows have driven gains of about 15% each in the Nifty and the Sensex since the start of March. They are now less than 3% away from their all-time highs hit on September 27, 2024.
“Markets have grown increasingly resilient to external noise, from geopolitical tensions to ‘U.S. Presidential’ tweets. There is little doubt that the bullish momentum is here to stay,” said Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research.
Steady inflows from domestic institutions and systematic investment plans boosted liquidity, while foreign institutional investors (FIIs) remained on the sidelines.
However, FIIs are starting the July derivatives series – which will run from June 27 to July 31 – with fewer index shorts compared to the previous month.
High net-worth individuals and retail players reduced index longs but added slightly to stock-specific bets, signalling a selective approach.
Frontline stocks like Reliance and big banks are holding firm, and that could pave the way for Nifty to rise towards its all-time high levels, said Sriram Velayudhan, senior vice president at IIFL Capital Services.
Events such as July 9 deadline for U.S. “reciprocal” tariffs, Federal Reserve’s rate decision, and domestic corporate earnings could trigger some volatility, but the broader sentiment remains positive, the brokerages said.
At the start of the July series, open interest (OI) – an indicator of the number of active positions in the market – rose to 80% on Nifty and 89% market-wide.
Long positions were seen in telecom, cement, IT, banking, metals and chemicals, while autos saw short-covering. FMCG was the only sector with a slight short build-up.
(Reporting by Bharath Rajeswaran and Vivek Kumar M in Bengaluru; Editing by Eileen Soreng)
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