Indian stock indices are on an upward trajectory, extending the significant gains witnessed last week. The benchmark Sensex and Nifty started the day 0.7% higher, building on the previous week’s surge. Both indices recorded approximately 3% growth, marking their highest gains in months.

In a historic move, the Sensex has crossed the 65,000 mark for the first time, signifying the robustness of the Indian stock market. This achievement is attributed to various factors, including the recent merger of HDFC and HDFC Bank, which propelled these stocks among the top gainers. Additionally, JSW Steel, Ultratech Cements, and Grasim Industries witnessed positive growth among the Nifty 50 stocks.

The ongoing rally in global stock markets can be credited to the unexpected strength of the U.S. economy, with a 2% GDP growth in Q1 2023. This performance defied expectations despite the Federal Reserve’s aggressive 500 basis points rate hike. Global markets, previously anticipating a U.S. recession by mid-2023, have had to adjust their pessimistic outlook.

A key distinction between the U.S. and Indian stock markets lies in the driving forces behind their rallies. While the U.S. rally is primarily led by tech stocks, the Indian market’s growth is more “broad-based.” Furthermore, continuous foreign fund inflows into Indian stocks have further buoyed the indices.

Experts believe that due to the strong market momentum, the rally is likely to continue; however, valuations are becoming stretched. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, suggests that investors adopt a cautious approach given the current market conditions. Ajit Mishra, SVP – Technical Research at Religare Broking Ltd, advises investors to maintain a “buy on dips” strategy, with the Nifty’s range expected to remain between 19,350 and 19,500.

As Indian stock indices soar to new heights, investors are keenly observing the market’s upward trajectory, eagerly anticipating further gains and assessing potential risks.