Benchmark indices are moving closer to record highs, and the momentum looks set to continue into July, powered by resilient domestic flows, macroeconomic tailwinds, and solid performances from frontline stocks like Reliance Industries and top banks.
The Nifty 50 has risen 2.9% in the June derivatives series, while small- and mid-cap indices posted gains of 5.1% and 3.1%, respectively, reported Reuters. And this rally has taken both the Nifty and Sensex within 3% of their all-time highs touched in late September last year.
NEW RECORD HIGHS IN SIGHT
What’s interesting to note here is that foreign istitutional investors are not fuelling this rally. Domestic institutional investors and steady SIP inflows have provided a strong liquidity base, even as foreign institutional investors (FIIs) have remained cautious. Analysts now say the market’s resilience is hard to ignore.
“Markets have grown increasingly resilient to external noise, from geopolitical tensions to US presidential tweets. There is little doubt that the bullish momentum is here to stay,” Abhilash Pagaria, Head of Alternative and Quantitative Research at Nuvama, told Reuters.
The July derivatives series, which runs from June 27 to July 31, has begun with lighter FII short positions compared to the previous month, signalling a slight shift in sentiment. Retail and high net-worth investors are taking a more selective approach, scaling back on index-wide bets while leaning into specific stocks.
According to Sriram Velayudhan, Senior Vice President at IIFL Capital Services, the sustained strength in blue-chip names such as Reliance and major banks could create a path for the Nifty to reclaim all-time high levels.
While the broader sentiment remains positive, some caution remains around key upcoming events. These include the July 9 deadline for US reciprocal tariffs, the Federal Reserve’s next interest rate decision, and the upcoming corporate earnings season—all of which could introduce short-term volatility.
TRADERS CONFIDENT
Still, early signals suggest traders remain confident. Open interest at the start of the July series stood at 80% on the Nifty and 89% market-wide, indicating heightened participation and conviction in continued upside.
The news agency also reported that long positions are building up in sectors like telecom, cement, IT, banking, metals, and chemicals. Meanwhile, autos are seeing some short-covering, and FMCG remains the only segment showing a marginal rise in short bets.
The combination of macro stability, strong domestic liquidity, and stock-specific conviction appears to be setting the stage for a bullish July. Whether the Nifty breaks its previous record remains to be seen, but the wind, for now, is definitely at the market’s back.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
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