Sensex pierces through 70,000-mark before retreating

Benchmark index the Sensex breached the 70,000-mark while the Nifty pierced through the 21,000-mark on Monday as both indices hit all-time highs before trimming gains as the US drug regulator’s observations on Dr Reddy’s Laboratories dragged down pharma stocks.

The trend was largely in line with global equities, which began a busy week on a modest note with a slew of central bank meetings and data releases in the pipeline.

Investors and traders anticipate a week full of significant events, including Tuesday’s release of US inflation figures, the US Federal Reserve’s policy announcement on Wednesday, and Thursday’s retail sales data. Policy decisions from both the European Central Bank and the Bank of England contribute to this week’s packed schedule.

Chinese stocks initially declined on Monday on surprisingly weak Consumer Price Index (CPI) data, impacting Asian equity markets, before they rebounded. The bounce-back driven by a surge in trading volumes for an exchange-traded fund that focuses on state-owned enterprises, sparking rumors of government purchases.

The Sensex rose 102 points, or 0.15%, to 69,928.53 on Monday, while the Nifty advanced by 27.70 points, or 0.13%, to close at 20,997.10.

Meanwhile, robust jobs data from the US, surpassing forecasts, have dampened expectations of a rate cut by the US Federal Reserve. The Fed is broadly anticipated to maintain its benchmark interest rate at its highest point in 20 years, as officials evaluate the delayed effects of the series of substantial rate increases initiated in early 2022.

These two elements played a key role in causing market fluctuations, interrupting the extended period of growth that had previously led both indices to reach all-time highs.

The Sensex is up by almost 5,000 points, or 7.66%, in the past month, bolstered by the Bharatiya Janata Party’s (BJP’s) victories in three state assembly elections and release of robust quarterly economic data.

Analysts have said that a stable political environment could boost investor confidence and drive the market higher. The BJP’s wins in Madhya Pradesh, Rajasthan and Chhattisgarh this month come ahead of next year’s general election.

In the September quarter, India’s economic growth soared past most analysts’ expectations, expanding at 7.6%, fueled by manufacturing, mining and construction sectors, government data released in the beginning of the month showed.

Gross domestic product (GDP) growth for the second quarter narrowly missed the 7.8% mark achieved in the June quarter, but was notably greater than the 6.2% seen in the September quarter of the previous year.

The Reserve Bank of India, in turn, kept the policy repo rate unchanged at 6.5% for the fifth consecutive time last week against the backdrop of the looming risks to food inflation, which it said might see an uptick in November and possibly in December.