Indian benchmark indices continued their bull run on Friday, with the BSE Sensex and NSE Nifty hitting new record highs as investors continued to cheer a dovish policy stance by the U.S. Federal Reserve. The market rally was further fuelled by the sharp correction in U.S. bond yields, an upgrade in India’s GDP forecast, ease in global oil prices, and sustained fund inflows by foreign investors. In the first 10 days of December, foreign institutional investors (FIIs) have invested ₹39,260 crore in Indian equities at a daily average of ₹3,900 crore.
In the first two weeks of December, the BSE benchmark Sensex has rallied 4,617 points, with the 30-share barometer crossing the psychological level of 71,000 mark, from 66,988 level at the end of trade on November 30. In the last two sessions, the Sensex has added more than 2,000 points after the U.S. central bank kept rates unchanged at 5.5% amid a slowing trend of inflation.
On Friday, the Sensex continued its exuberance for the second day and rose as much as 1,091 points, or 1.54%, to scale a new record high of 71,605 in intraday trade. Finally, the index settled at a new closing high of 71,483, up 969 points. In the previous session, the benchmark index had ended 929 points higher at 70,514 levels.
The NSE Nifty also extended its rally today and gained 309 points, or 1.46%, to touch a new all-time high of 21,492. The Nifty50 ended the day’s trade at 21,456, up 274 points.
Rupak De, Senior Technical analyst at LKP Securities, says the Nifty's upward momentum persisted with the bulls maintaining control in the market. By achieving a new all-time high, the index has marked its seventh consecutive weekly gain.
“The prevailing sentiment appears strongly in favor of the bulls, as indicated by the absence of any reversal signals on the technical charts. Resistance is observed at 21,500, while a potential further rally in the Nifty could occur upon breaching this level. Support is currently positioned at 21,300," De says.
Bucking the trend, the broader market witnessed a mixed trend, with the BSE midcap closing marginally lower, while the smallcap index ending 0.58% higher.
The top gainers on the BSE Sensex pack were HCL Technologies, Tata Consultancy Services, Infosys, State Bank of India, and Tech Mahindra, rising between 3.5% to 5.5%. On the other hand, Nestle India, Bharti Airtel, Maruti Suzuki India, ITC, and Kotak Mahindra Bank were among top laggards, falling in the range of 0.2% to 1.7%.
On the sectoral front, IT stocks extended their buying momentum for the second day after the U.S. central bank indicated that the tightening cycle is over and three rate cuts are possible in 2024. The positive sign of easing inflation in the U.S. with a less aggressive monetary stance has raised hopes of improvement in the health of the world’s largest economy, and that big deal wins should resume from large clients.
“The buoyancy continued in the market as investors were expecting the clouds over U.S. economic growth to recede by H2CY24 and that the economy would achieve a soft landing aided by normalization in monetary policy. The USD/INR witnessed a steep fall on account of the prospects of interest rates being cut next year. The IT index outperformed expectations of a rise in demand in the U.S. economy,” says Vinod Nair, Head of Research at Geojit Financial Services.
The BSE IT and Teck indices have surged nearly 7% in two sessions, led by index heavyweights Infosys, HCL Technologies, Tata Consultancy Services (TCS), Tech Mahindra, and Wipro. The mid-sized IT players such as Coforge, MphasiS, InfoBeans Technologies, Zensar Technologies, Xchanging Solutions, Mastek, HFCL, and Persistent Systems have zoomed up to 16% in two days.
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