Today’s surge across the Nifty, Sensex, and stock markets: After the BSE and NSE began trading on August 15, due to the Independence Day vacation, the Indian stock market saw an unexpected rally on Friday, following strong cues from the global market.
At the highest point of the day, the BSE Sensex was up 1,412 points and had reached an intraday high of 80,518. In between, the Nifty 50 index, which is traded on the NSE, reached a record high of 24,564.
The Nifty50 increased 397.40 points, or 1.65%, to close at 24,541.15, while the Sensex finished the day up 1330.96 points, or 1.68 percent, at 80,436.84. The BSE MidCap and SmallCap indices both saw gains of more than 1.5% in the overall market.
ICICI Bank and HDFC Bank, two of the major players in the index, accounted for around 25% of the day’s gain. Key donors were TCS, Infosys, M&M, Reliance Industries, and ITC.
With a 4% rise, Tech Mahindra was the largest mover in percentage terms. While the gains for Mahindra & Mahindra, Tata Motors, TCS, and HCL Technologies ranged from 2.6% to 3.5%.
These are the three main factors for Friday’s nearly 1,000-point jump in the Sensex. Bets on a US Fed rate drop are rising, and global stocks climb.
The previous two days have seen a rise in expectations for a rate in September due to lower-than-expected consumer inflation statistics from the US and higher-than-expected increase in US retail sales in July.
Against the anticipation of the market of 3 percent, US CPI inflation fell to a 3-year low of 2.9%. Additionally, on Thursday, retail sales exceeded Wall Street forecasts, growing by 1% in July compared to a 0.4% estimate. This increased speculation of a rate drop of up to 50 basis points during the US Federal Reserve policy meeting in September.
“This decline moves inflation closer to the Federal Reserve’s 2 percent comfort level and moves us one step closer to rate decreases. One more remains.
Will it be sufficient to lift the markets, though, is still the crucial question. There is a good chance that the US will shortly experience a recession. Apurva Sheth issued a note warning, “If that happens, the rate cuts won’t help to keep the markets afloat.”
In the meantime, the S&P 500 and Dow Jones both gained about 1.5% on Thursday, while the NASDAQ surged by about 2.5%. This resulted in purchases in international markets.
Back home, a strong surge in IT shares was sparked by expectations of an improving US economic picture. Aside from that, the optimism regarding growth was also supported by the latest Q1 earnings.
Amidst other significant Asian markets, the Nikkei jumped 3.6% in Japan. The Hang Seng saw a 1.7% increase. Taiwan and the Kospi both had 2% increases. The Straits Times saw an increase of more than 1%.
DIIs flows continue to be Strong
With the exception of the first trading day of the month, domestic institutional investors (DIIs) have been steady purchasers in the cash market even as benchmark indices have experienced significant volatility in August thus far.
August has seen net stock purchases by DIIs of Rs 31,450 crore. They have been the mainstay of the 2024 market boom thus far, supported by consistent SIP inflow from individual investors. According to reports, DIIs have made net purchases in every calendar month thus far this year
Conversely, during the same period, foreign investors sold off stocks worth Rs 1.49 lakh crore.
Trades are waiting for a Nifty Breakout
The Nifty has been stuck between the 20-DMA (Daily Moving Average) and the 50-DMA since the sell-off on August 5. The index was observed trying to break above its 20-DMA on a daily basis following today’s strong surge. As of right now, the 20-DMA is 24,470, and the 50-DMA is 24,105.
Critical barriers are located at 24,350 on the higher side and 24,000 on the lower side of the trading range, which is 23,900 to 24,500. Once this range is breached, a big move is expected, according to a note from Sameet Chavan, Head Research, Technical and Derivative at Angel One.
