Sensex hits all time high, defence stocks in focus

• Sensex hit an all-time high in early trade as it gained 146 points, extending the gains it saw on Tuesday.
• The markets are bullish because indicators say that US might avoid a recession, say experts.
• The benchmark indices ended in the green on Tuesday, after a volatile session.

Indian stock indices traded positively on Wednesday morning, tracking firm cues from overseas peers and indications that the US may avoid a recession. Sensex and Nifty were 0.2-0.3 per cent higher at around 10:25 am.

Sensex hit an all-time high in early trade as it gained 146 points, breaking above the 63,583 market it witnessed on Tuesday. The markets ended higher on Tuesday, after a volatile trade.

"In tune with the International Yoga Day, the market is slowly stretching both ways, without any sharp up or down moves. However, the broad market trend is up," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"Globally markets are bullish even when global growth is sluggish. The reason for this bullish trend is that the US recession, which markets had discounted last year, didn't happen and there are indications that the US might avoid a recession. So, markets are correcting the wrong discounting of last year," Vijayakumar added.

Strong fundamentals including a firm GDP outlook, moderate inflation and strong purchases by foreign investors are positive for the markets. The domestic stock indices are near their all-time highs.

However, the slow progress of the southwest monsoon by far remains a concern for financial markets.

Meanwhile, Prime Minister Narendra Modi's US visit and possible defence collaboration between the two countries have brought back focus to defence stocks in India.

Defence stocks have performed quite strong, in fact, many turned multi-bagger, over the past few years due to the government's aggressive indigenous manufacturing push.

Market experts expected the indices to have a weak start to the trading session. “With most of the Asian markets trading in red, domestic equities are likely to see a weak start in early Wednesday trades. All eyes will be on the US Federal Reserve Chairman's testimony before the US Congress later today. While the Fed has indicated that it is not yet done with its interest rate hike for the year, other negatives like falling crude oil prices in view of a sluggish demand from China and other economies could make investors jittery going ahead. However, going by the technical indicators, both Nifty and Bank Nifty are likely to trade with positive bias as long as they stay above their biggest support levels at 18651 and 43300, respectively,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.

(With ANI inputs)