Indian stock market rallied sharply in Friday’s intra-day trades tracking strong cues from the overseas market, as the BSE and the NSE resumed trading post the holiday break on August 15 – on account of the Independence Day holiday.
In the broader market, the BSE MidCap and SmallCap indices also surged over 1 per cent each.
Among the index heavyweights – ICICI Bank and HDFC Bank contributed to nearly one-fourth of the day’s gain so far. TCS, Infosys and Reliance Industries were the other key contributors as these stocks gained in the range of 1-2 per cent each.
In terms of per centage gainers; Tech Mahindra was the top mover, up nearly 3 per cent. Mahindra & Mahindra, Tata Motors, TCS and HCL Technologies were up over 2 per cent each.
Here are the 3 key reasons why the Sensex has rallied over 1,000 points on Friday.
Global stocks rally as bets on US Fed rate cut rise
Over the last two days, hopes of a rate in September rose on the back of cooler US consumer inflation data and stronger-than-expected growth in US retail sales in the month of July.
The US CPI inflation dipped to a 3-year low at 2.9 per cent as against market expectations of 3 per cent. Further on Thursday, retail sales superseded Wall Street expectations with 1 per cent growth in July as against an expectation of 0.4 per cent; thus raising bets of up to 50 basis points rate cut in the US Federal Reserve policy meeting in September.
“This fall brings inflation closer to Feds comfort mark of 2 per cent, brings us one step closer to the rate cuts. There is still one more inflation reading which will be published before the September meeting. Thus, hopes are still alive and who knows we might get more than 25 bps cut”, said Apurva Sheth, Head of Market Perspectives and Research of SAMCO Securities.
“But the key question remains will it be enough to cheer the markets? There is strong possibility that US enters a recession soon. If that happens then the rate cuts won’t help to keep the markets afloat.” cautioned Apurva Sheth in a note.
Meanwhile, the NASDAQ zoomed almost 2.5 per cent on Thursday; while Dow Jones the S&P 500 rallied around 1.5 per cent each. This prompted buying in global markets.
Among other major markets in Asia – Japan’s Nikkei soared 3.6 per cent. Hang Seng gained 1.7 per cent. Kospi and Taiwan jumped 2 per cent each. Straits Times too was up over 1 per cent.
DIIs flows remain robust
Even as benchmark indices witnessed severe volatility in the month of August so far, domestic institutional investors (DIIs), barring the first trading day of the month, have been consistent buyers in the cash market.
DIIs so far in August have net bought stocks worth Rs 31,450 crore. They have been the pillar of the market boom so far in 2024; on the back of steady SIP flows by retail investors. With net purchases in each of the calendar month so far this year, DIIs have reportedly invested Rs 2.92 lakh crore in Indian equities thus far.
On the contrary, foreign investors have offloaded stocks to the tune of Rs 1.49 lakh crore in the same period.
Traders await breakout on Nifty
Post the sell-off on August 05, the Nifty has been trapped in between in 20-DMA (Daily Moving Average) and the 50-DMA. With today’s sharp rally, the index was seen attempting to break above its 20-DMA on the daily scale. The 20-DMA at present stands at 24,470, while the 50-DMA stands at 24,105.
“The trading range is between 23,900 and 24,500, with 24,000 on the lower side and 24,350 on the upper side as critical hurdles. A significant move is anticipated once this range is broken”, said Sameet Chavan, Head Research, Technical and Derivative – Angel One in a note.
First Published: Aug 16 2024 | 1:38 PM IST