The Indian stock market continued its upward trajectory for the third consecutive session on Tuesday, July 16, with both Sensex and Nifty 50 reaching new record highs. The benchmark indices, Sensex and Nifty 50, showed resilience despite weak global cues and cautious investor sentiment ahead of the Union Budget.

Sensex climbed to a fresh record high of 80,898.3 during the session before closing at 80,716.55, up 52 points or 0.06%. Similarly, Nifty 50 peaked at 24,661.25, ending the day at 24,613, an increase of 26 points or 0.11%. These closing figures mark new highs for both indices, reflecting the market's bullish trend.

Drivers of the Rally
The Indian stock market has been on a record-breaking spree in July, buoyed by several positive factors. Investors are optimistic about a growth-oriented Union Budget, which is expected to boost economic activity. Additionally, the anticipation of robust Q1 earnings reports from Indian corporates has further fueled market enthusiasm. The steady progress of the monsoon season, crucial for the agricultural sector, has also contributed to the positive sentiment.

Limiting Factors
Despite the overall upward movement, gains have been limited due to concerns over high market valuations. Although the Nifty 50 has been in the green for eight out of the twelve sessions in July, it has only risen by 2.5% this month. Market experts suggest that most variables are already factored in, leaving little room for new catalysts. They believe a decisive move will likely occur only after the Union Budget is presented on July 23.

Selective Buying and Profit Booking
Investors have adopted a selective approach, buying shares of certain heavyweights while booking profits in others. Bharti Airtel, Infosys, ICICI Bank, and Hindustan Unilever emerged as the top gainers on the Nifty 50 index, reflecting strong investor confidence in these stocks. Conversely, shares of Reliance Industries, Kotak Mahindra Bank, and NTPC were among the top drags, indicating profit booking and cautious sentiment in these counters.

Global Market Influence
The performance of the Indian stock market also mirrored trends in global markets. Top European markets were in the red at the time of Nifty 50's closing, influenced by rising speculations surrounding the US presidential election. A Reuters report highlighted that former US President Donald Trump was leading in several swing states, adding to the market's uncertainty.

Federal Reserve Signals
Adding to the global economic landscape, signals from the US Federal Reserve provided some relief to investors. Federal Reserve Chair Jerome Powell, speaking at the Economic Club of Washington, indicated a potential rate cut in the September meeting. Powell's comments that "recent inflation data has strengthened policymakers' confidence that price pressures are on a sustainable downward path" offered some reassurance to the market.

Conclusion
As the Indian stock market continues to navigate through a mix of optimism and caution, the upcoming Union Budget remains a critical event that could shape future market movements. Investors are keenly watching for policy announcements that could drive economic growth and corporate performance. Until then, the market is expected to remain range-bound with selective buying and profit booking shaping daily movements.

The consistent performance of heavyweights like Bharti Airtel, Infosys, ICICI Bank, and Hindustan Unilever, coupled with cautious sentiment towards high-valuation stocks, highlights the market's balanced approach in the face of upcoming economic and political events.

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