Nifty @25,000: Indices close at new highs, Fed rate talk adds strength

India's equity benchmarks closed at record highs on Thursday with the Nifty surpassing the 25,000 mark for the first time in a roller-coaster trading session. The overnight strength on Wall Street following US Federal Reserve Chair Jerome Powell's remarks on interest rate cuts helped the index cross the milestone but gains were limited amid concerns that the market was overbought.

The Nifty advanced 0.24%, or 59.75 points, to close at 25,010.9, after hitting a all-time high of 25,078.3. The Sensex recorded an all-time high of 82,129.4 before closing at 81,867.5, up 0.15%, or 126.2 points, over the previous day.

In the US, the S&P 500 jumped 1.6% and the Nasdaq Composite surged 2.6% on Wednesday after Powell indicated the Fed could start cutting interest rates in September.

"Overnight, the US Fed's dovish stance on the September rate cut led a rally in the tech stocks and created a backdrop of strong global markets," said Andrew Holland, CEO-Avendus Capital Alternate Strategies. "A further up-move of around 4% from the current levels is expected given the robust liquidity in domestic markets."

At home, the Sensex and the Nifty on Thursday ended higher for the fifth straight session and are up nearly 14% since June 4 - the general election results day.

"While the RSI (Relative Strength Index) indicates that the markets are in an overbought zone, the trend is strong on the upside, which is why investors should look for buying opportunities," said Jain.

The next hurdle for the Nifty is at 25,300, which is likely to be surpassed in the first half of August, he said.

Foreign Portfolio Investors (FPIs) net bought shares worth Rs 2,089 crore on Thursday, while their domestic counterparts sold to the tune of Rs 337 crore.

The Midcap 150 index declined 0.71% while the Smallcap 250 index ended 0.69% lower on Thursday. Out of the 2,800 stocks traded on NSE, 1,008 rose, while 1,725 fell and 67 remained unchanged.

"The markets have rallied quite a lot which has led to a lower margin of safety in the midcaps and smallcaps, so largecaps are preferred in the near term while small and midcaps are preferred for the long term," said Neeraj Chadawar, head - fundamental and quantitative research, Axis Securities.

Chadawar said the markets are in a bull case scenario and might be at 27,000 levels by March 2025.

In Asia, Hong Kong fell 0.23%, Taiwan ended 1.99% higher, and South Korea ended 0.25% higher. Indonesia gained 0.97% and China declined 0.22%.