Indian market made a strong rally in the week between August 8-12 and scaled up to the highest level in four months. The bull run on benchmarks Sensex and Nifty 50 tracked positive global cues as softer-than-expected US inflation data lifted the appetite over expectations of interest rate hikes at a slower pace. Further, a consistent rise in foreign funds inflow also boosted the sentiment. However, the rupee stayed weak against the US dollar on higher crude oil prices. The Indian benchmarks soared for the fifth straight session which led to a massive surge in investors' wealth. This week alone, BSE market capitalisation crossed over Rs275 lakh crore, and investors' wealth climbed by more than Rs3.77 lakh crore.

On Friday, Sensex closed at 59,462.78 higher by 130.18 points or 0.22%. While Nifty 50 surged by 39.15 points or 0.22%. Oil and gas along with metal stocks were major drivers of the indexes, while banking stocks also made some notable contributions to the upside. IT and healthcare stocks were laggards.

At the interbank forex market, on Friday, the Indian rupee settled at 79.74 against the US dollar declining by 12 paisa from the previous day. This was amidst a strong greenback against a basket of currencies and a spike in crude oil prices which offset the impact of buying sentiment in domestic equities.

Vinod Nair, Head of Research at Geojit Financial Services said, "Return of FIIs and declining dollar index aided the market rally. While Metals and Oil & Gas garnered buying interest, IT and pharma weighed on sentiments. Oil and gas stocks were in focus as the government diverted some natural gas from industries to city gas operators in an effort to moderate the prices of CNG and piped cooking gas."

While Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said, “Equity markets continued to rally with resilient performance during the week. Key bench mark indices like BSE-30 and Nifty-50 has given positive returns this week. Market rally has been broad-based with gains seen in BSE Midcap, BSE Smallcap, and majority of sectoral indices. Sectoral index performance was led by BSE Metals and BSE Capital Goods indices, whereas some defensive sectors underperformed the broader market."

BSE market cap stood at nearly Rs275.08 lakh crore on August 12, - which is a rise of Rs3,77,107.35 crore from a market valuation of Rs271.31 lakh crore last week ending August 5.

Top 10 companies in terms of market valuation accounted for over 27% of the total BSE market cap.

These top 10 biggies are - Reliance Industries at the top spot with a market cap of over Rs17.81 lakh crore, followed by TCS with a valuation of Rs12.44 lakh crore, and HDFC Bank with a cap of over Rs8.25 lakh crore. Infosys and Hindustan Unilever held third and fourth rank with a market cap of nearly Rs6.71 lakh crore and Rs6.10 lakh crore.

Other companies are - ICICI Bank with a valuation of nearly Rs6.09 lakh crore, SBI at over Rs4.73 lakh crore, HDFC at nearly Rs4.46 lakh crore, Bajaj Finance at over Rs4.42 lakh crore, and LIC with a market cap of over Rs4.31 lakh crore.

This week, Sensex has risen by around 1,075 points and Nifty 50 a little over 300 points. Overall, both the benchmarks have advanced nearly 2?ch.

Chouhan added, "Global equity markets continued their strong rally, as the US CPI moderated in July. In India, FPIs flows were positive this week."

Foreign portfolio investors (FPIs) have pumped in Rs22,453 crore in the Indian equity market so far in August -- which is the biggest buying so far in 2022. FPIs have been net sellers in the first six months of 2022, and emerged as buyers from July. FPIs invested Rs4,989 crore in July month in the equities.

What to expect next week?

Trading in stock market will be closed on Monday due to Independence Day celebration. 

Mitul Shah- Head of Research at Reliance Securities said, "India’s CPI inflation eased in July to 6.71% from 7.01% in June. However, rising prices continue throttle market sentiments. Several countries including India will release the WPI data for July. Economic sentiment in Europe, China industrial production, unemployment in the UK and US are the other key factors which are likely to determine the trajectory of domestic and international markets. The FED is expected to continue with its hawkish rate hikes until inflationary pressures in the U.S reduce significantly. The central bank in the coming week, will release the minutes of the Federal Open Market Committee (FOMC) meeting held in July."

Shah added, "The earnings season largely over with strong revenue growth amid rising commodity prices. For 1QFY23, revenue of NSE 500 companies increased by 39% YoY, while EBITDA and PAT grew by 19% and 23% respectively. Nifty gain 16% since June low, we expect market to remain volatile in the near term while strong economic rebound, normalised commodity prices, inflation within targeted range and better visibility expected by 2HFY23, which would transform Nifty valuation to close to historical average. Our FY23 target for Nifty is 19,000 at 20x FY24E EPS."

"FII investment has started in past few weeks and likely to continue. Equities would continue their outperformance with double-digit returns. Sectors like Automobile, Capital goods, Consumer would be in focus in FY23," Shah lastly added.

Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said, "With Q1FY23 result season coming towards close, market focus will shift towards macro factors that include inflation, Central Bank rate action, oil prices, and recession concerns in key economies globally."