Indian stock indices log record highs for fifth consecutive session; Sensex nearing 86,000

New Delhi: Stock indices in India continued to march ahead, touching fresh highs for the fifth straight session on Thursday. Sensex almost touched 86,000 at one point on Thursday.

Sensex closed the day at 85,836.12 points, up 666.25 points or 0.78 per cent, while Nifty closed at 26,186.00 points, up 181.85 points or 0.70 per cent. Among the sectoral indices, Nifty auto and Nifty metal were the top movers at 2.26 per cent and 2.13 per cent, respectively.

US Federal Reserve's monetary policy committee loosening interest rate by steep 50 basis points, in particular, has been lending fresh support to Indian stocks.

Loosening monetary policy in the US through rate cuts typically leads to a flight of capital to markets where policy rates are high. The steeper the rate cut in the US, the more the tendency to flight of capital to alternative investment destinations, including India.

Continued buying by foreign portfolio investors (FPIs) also somewhat supported the stock indices. Foreign portfolio investors upped their investments in India, hoping for a better return on investments due to the interest rate differentials.

They have so far mopped up Rs 49,459 worth of stocks in India in September, data made available by NSDL showed. They have been net buyers for the fourth month now.

"There are no immediate near-term triggers that can take the market sharply up or down. Up moves may attract selling by FIIs who are likely to move some more money to China and Hong Kong since these markets are cheap and are witnessing an uptrend now. But FII selling is unlikely to push the market down significantly since the ample domestic liquidity can easily absorb such selling," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

"Since there is no valuation comfort in the market now and the mid and smallcap segments are overvalued, investors should give priority to safety and prefer largecaps. Bank Nifty has more potential to move up and there is valuation comfort in this space," Vijayakumar added.