The record-breaking gaining streak in the domestic markets extended to a 13th day on Monday, with growing optimism about rate cuts in the US keeping sentiment buoyant. The benchmark Nifty 50 index closed with gains for a 13th day in a row, gaining nearly 5 per cent during this period. The index has never gained more than 11 sessions in the past.
After hitting a high of 25,334, the 50-share blue-chip index closed at 25,279, with a gain of 43 points or 0.2 per cent. The Sensex ended the session at 82,560, with a gain of 194 points or 0.2 per cent. Both indices hit new highs on both an intra-day as well as a closing basis, with consumer and software stocks leading the charge. BSE-listed firms’ combined market capitalisation rose by Rs 45,000 crore and stood at Rs 464.9 trillion.
Infosys and ITC drove the gains. Hopes of a recovery in rural demand after a good monsoon helped the gains in ITC. IT stocks, including Infosys, rose as they earned a huge chunk of their revenues from the US. However, some analysts cautioned that the bullishness in IT stocks is irrational.
“Gains in IT stocks have now become momentum-driven. In the last couple of years, the revenue growth in dollar terms has been in single digits,” said Chokkalingam G, founder of Equinomics.
Foreign investors bought shares worth Rs 1,735 crore, while domestic institutions too were buyers to the tune of Rs 356 crore.
Traders are pricing the US rate cycle to begin in September, with some betting on a 50 basis-point cut, according to data compiled by Bloomberg. However, some experts say the equities rally would run out of steam even if there is a cut by the Fed. Analysts at JP Morgan Chase and Co said any cut in interest rates would be in response to slowing growth.
Analysts said the US economy is not out of the woods yet, and geopolitical and political uncertainty is elevated. Moreover, September has historically been a bad month for US equities. The lack of revival in the Chinese economy despite multiple rounds of stimulus also weighs on investors’ minds.
Apart from the US elections, the initial jobless claims, non-farm payroll data, and other macro data from across the globe will determine the market’s trajectory.
“The Indian market continues to hold its ground and sustain the new high with marginal positivity. The positive trend is broadly sustaining as the domestic economic growth is still healthy, and PMI numbers are much above the long-term average, indicating an uptick in earnings in the coming quarters. However, volatility has increased as Q1 GDP growth has moderated, and a similar trend has been witnessed in corporate earnings. Also, August Indian PMI readings were marginally below July numbers, indicating that caution is in the air,” said Vinod Nair, head of research at Geojit Financial Services.
The market breadth was negative, with 2,262 stocks declining and 1,776 advancing. Two-thirds of Sensex stocks gained. The Nifty Small 100 and the Nifty Midcap 100 indices ended with losses. Bajaj Finserv and Bajaj Finance were the best-performing Nifty stocks.
First Published: Sep 02 2024 | 6:32 PM IST
