Reliance Industries, HDFC Bank Drive Indian Stocks To New Highs

Indian shares rose to fresh all-time highs, led by index heavyweight Reliance Industries ahead of the demerger of the financial services unit, while HDFC Bank powered financials after strong June quarter results.

The Nifty 50 index closed 0.75 per cent higher at a record high of 19,711.45, while the S&P BSE Sensex climbed 0.80 per cent to 66,589.93.

Eleven of the 13 major sectoral indexes logged gains with the high-weightage financials adding 1.25 per cent. Private lender, HDFC Bank, which is the highest weighted stock in Nifty 50 following its merger with HDFC, rose over 2 per cent after reporting a jump in June quarter profit.

Reliance Industries also advanced 2 per cent. Analysts expect the conglomerate to gain further from the demerger of financial services unit effective 20 July.

The rally also extended to broader markets with small-caps and midcaps hitting fresh 52-week and record highs, respectively.

"We remain highly optimistic about domestic equities due to robust foreign inflows and moderation in US inflation," said G Chokkalingam, managing director for research at Equinomics Research.

Foreign portfolio investors bought Indian equities worth Rs 30,660 crore in the first half of July and are on course to extend their buying streak for a fifth straight month.

"Weakness in China's recovery is also a factor behind rising foreign inflows into India," said Deven Choksey, director at KRChoksey Holdings.

Asian and European equities were subdued after China's GDP rose at a lower-than-expected rate in the June quarter.

Among individual shares, Zee Entertainment jumped over 6 per cent and powered a 3.15 per cent rise in the media index following the constitution of an interim committee to run operations after the market regulator restricted CEO Punit Goenka from holding key managerial positions in listed companies for one year.

Oil & Natural Gas Corporation lost nearly 2 per cent after the government raised the windfall tax on petroleum crude over the weekend.