New day, new high: Will stocks sustain Thursday's momentum?

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Subscribe to enjoy similar stories. Stock benchmarks touched new records and mid-cap stocks joined the Street party on Thursday, signalling rising risk appetite among investors betting on interest rate cuts in the US and earnings momentum in India.

The day witnessed a strong rally driven by a mix of factors: weekly derivatives expiry; a rate cut in China; optimism ahead of a rate cut that the European Central Bank announced later in the day; and hopes that the US Federal Reserve might follow suit soon. On Thursday, the Nifty surged 1.9% to close at 25,388.90, while the Sensex rose 1.8% to 82,962.7, the highest percentage gain for both since 7 June.

Both indices hit record highs during the day - Nifty at 25,433.35 and Sensex at 83,116.19. Meanwhile, the Nifty Midcap 100 climbed 1.2% to 59,640.30, reaching a record intra-day peak of 59,697.75.

Besides sharp gains in Reliance Industries and banking stocks that boosted headline indices, the Nifty Metal index led sectoral performers with a 3% increase, followed by the Nifty Auto index with 2%. However, a crucial question emerges: Will the rally sustain or eventually fizzle out? "Looks like the rally is all set to continue, with India becoming a go-to destination for foreign investors," said Taher Badshah, CIO of Invesco Mutual Fund.

However, he feels that India may now witness a more mature rally as rate cycle is expected to change, with some moderation in the industrials sector and increased interest in financials, technology, pharmaceuticals, and the consumption sectors, which were previously subdued by inflation, he explained. Though Thursday's surge was due to a combination of factors, Sandipan Roy, chief investment officer at Motilal Oswal Private Wealth expects the