Market nears peak on dollar tailwind

Stocks jump 1.2%, but futures rollovers signal weak conviction

- Srushti Vaidya

Markets rallied towards their lifetime highs on Wednesday, taking cues from global markets that surged on a weaker dollar and hopes of a US rate cut.

However, signals from the derivatives market indicate a lack of conviction, as traders eye the US Federal Reserve's rate actions and the anticipated India-US trade deal.

The Nifty surged 1.24% to 26,205, just shy of its record high of 26277.35 hit on 27 September last year, while the Sensex rallied 1.21% to 85,609, short of its record 85978 hit on the same day last year. Among the Nifty's top movers were HDFC Bank, Reliance Industries and ICICI Bank, which together pulled the index 0.36% higher.

The dollar index, which tracks the US dollar against six global currencies, is down 0.52% over the past two days. In the last three days, Japan's Nikkei 225 is up 1.92%, China's CSI 300 1.57%, and Kospi 2.99%.

"The weaker dollar has spurred a risk-on trade globally, which benefited us," said Ashish Gupta, chief investment officer, Axis Mutual Fund. Gupta, however, warned that primary shares worth ₹30,000 crore were about to hit the market, which would raise volatility. "We will make a high, but it won't be a smooth ride because of the supply,” added Gupta.