Mumbai, June 13, 2024
Indian benchmark stock market indices opened at record highs on Thursday, fueled by significant gains in information technology (IT) stocks and positive market sentiment following a favorable US inflation report, which raised expectations of a potential Federal Reserve rate cut.
As of 10:08 AM, the S&P BSE Sensex surged 213.45 points to reach 76,820.02, while the NSE Nifty50 climbed 51.40 points to 23,374.35. Both indices advanced approximately 0.7% at the open, achieving new record levels.
Market Performance
The broader market indices also commenced the trading session positively. IT firms, which derive a substantial portion of their revenue from the US, experienced a 1.1% increase.
The top gainers on the Nifty50 included Divi’s Laboratories, HDFC Life, Shriram Finance, LTIM, and Hindalco. Conversely, the top losers were Tata Consumer Products, HUL, Britannia, Eicher Motors, and Cipla.
Economic Indicators and Market Sentiment
This positive market movement aligns with a series of favorable developments. Notably, the Nifty50 has achieved all-time highs three times in four sessions this week. This surge is attributed to policy continuity following the Lok Sabha election results and the Reserve Bank of India (RBI) raising its economic growth forecast.
Furthermore, data indicated that India’s retail inflation slightly eased in May, supported by a drop in fuel prices, although food inflation rose year-on-year. Economists anticipate that the central bank will maintain rates until the October-December quarter.
Expert Insights
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the positive inflation data, stating, “There is good news on the inflation front, both in the US and in India. In the US, May CPI inflation has declined slightly less-than-expected to 3.3%, with month-on-month inflation remaining flat. However, the economy continues to remain strong and there are no clear signs of labor market loosening.”
“Therefore, Fed chief Jerome Powell has kept rates unchanged and has hinted at only one rate cut in 2024 and possibly four rate cuts in 2025. In India, May CPI inflation has declined to 4.75% and core inflation has come in at only 3.1%. This paves the way for a rate cut by the MPC in October,” he added.
“The takeaway from the inflation numbers is that the disinflation process is well on track. From the market perspective, this is positive news, particularly for banking stocks,” Vijayakumar concluded.
Conclusion
The robust opening of Sensex and Nifty, driven by gains in IT stocks and positive economic indicators, reflects strong investor confidence. Market participants will continue to monitor domestic and international economic developments to gauge the future trajectory of the indices.
