Indian equities extended their winning run during the first session of July by logging new highs on Monday, supported by gains in banking and technology stocks. The benchmark Sensex ended the session at 79,476, with an increase of 443 points, or 0.6 per cent. The Nifty50 index closed at 24,142, rising 131 points, or 0.5 per cent. Both Sensex and Nifty surpassed their previous closing highs on Thursday.
Most of the gains in Sensex were driven by HDFC Bank, which rose by 1.3 per cent; ICICI Bank, up 1.03 per cent; Infosys, up 1.5 per cent; and TCS, which jumped by 1.7 per cent. The gains were broad-based, with the Nifty Midcap 100 and Nifty Smallcap 100 climbing 0.82 per cent and 1.51 per cent, respectively to close at new highs.
Foreign funds sold shares worth Rs 426 crore, while domestic institutions pumped in Rs 3,917 crore. IT stocks rose as the Federal Reserve’s preferred measure of underlying US inflation slowed in May, raising bets for lower interest rates later this year.
The core personal consumption expenditures price index data, which strips out volatile food and energy items, rose 0.1 per cent from the prior month. A rate cut in the US is good for Indian equity markets as higher rates make US bonds more attractive than equity investments in emerging markets like India.
“The domestic market sustained its upward momentum, with a reduction in US inflation, raising hopes for a rate cut by the Fed in September. This optimism contributed to the strong performance of IT stocks. We anticipate this trend will persist in the near term due to expectations of a rebound in discretionary spending. Investors are now focusing on upcoming US job data and the Fed Chair’s speech to further indicate interest rates,” said Vinod Nair, head of research at Geojit Financial Services.
Indian equity markets had posted the best gains in six months in June as the return of the National Democratic Alliance (NDA) government, albeit with a reduced majority, gave hopes of political stability and policy continuity. The robust macro numbers and support from both domestic and foreign institutional investors aided the gains. Going forward, this month’s Union Budget and corporate numbers will determine the market trajectory.
“The consistent buying interest on dips suggests bullish control, likely continuing the current tone. The renewed strength in midcap and smallcap segments adds further positivity. Traders should focus on selecting sectors/themes with rotational participation and consider adding positions during pauses or dips,” said Ajit Mishra, SVP- Religare Broking.
The market breadth was strong, with 2,630 stocks advancing and 1,381 declining on the BSE. The combined market capitalisation of the BSE-listed stocks jumped by Rs 3.8 trillion to end at a record Rs 443 trillion ($5.31 trillion). Tech Mahindra was the best-performing Sensex stock and rose by 3 per cent, followed by Bajaj Finance, which rose by 2.2 per cent. Ultratech Cements rose 2.1 per cent.
First Published: Jul 01 2024 | 8:23 PM IST
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