The Sensex and Nifty hit closing highs on June 16 and all-time highs were within sniffing distance. For all practical purposes for a lot of people, closing levels matter a lot. The midcap index hit a new high every day of the week. And earnings growth is a major factor that drives this move.

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The FY23 earnings per share (EPS) have gone up around 10 percent from FY22. And the index trades at 19.5 times. In fact, Sunil Singhania, the founder of Abakkus Asset Management, said the euphoria starts at 23-24-25 times and goes up to even 50 times.

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In October 2021, the Nifty was at 18,600. And now, one-and-a-half years later, it is at 18,800. In between, it had one-and-a-half years of about 20 percent earnings growth. So, the market itself is not very expensive. Also, there is a lot of money chasing stocks, there is a lot of appetite.

In terms of leadership, it's also imperative to note that FMCG and auto sectors have been the backbone of this market and both these indices have been phenomenal and making new highs. Of course, near term leadership is with pharma and metals, but the only sector which has not made up its mind yet is Nifty IT, which is still around its 200-day moving average. The largecap IT still has a problem; midcap IT is fine.

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