Indian benchmark equity indices closed at a new all-time high on Thursday, led by banking and technology stocks, after the US Federal Reserve flagged the end of its tightening cycle and struck a dovish tone on the interest rate outlook.
The 30-share BSE benchmark Sensex advanced 930 points or 1.34% to settle at 70,514. The broader NSE Nifty surged 256 points or 1.23% to end at 21,183.
Meanwhile, the market capitalisation of all listed companies on BSE increased by Rs 3.93 lakh crore to Rs 355.12 lakh crore.
From the Sensex stocks, Infosys, Tech Mahindra, Wipro, HCL Tech, IndusInd Bank, and Bajaj Finance were the top gainers, rising 3-4%. On the flip side, Power Grid, Nestle, JSW Steel, Maruti, and Asian Paints closed in the red.
The rise in IT stocks comes after the Fed acknowledged it is making real progress in easing inflation while maintaining a rate pause.
Fed Chair Jerome Powell said the Fed is aware of the risks of keeping rates higher for too long and lowering them too late, bolstering expectations of a rate cut in early 2024.
Sector-wise, Nifty IT surged 3.5%, while Nifty Realty advanced 3.9%. Nifty Bank, Financial Services, Private Bank, and Oil & Gas gained over 1% each. In the broader market, Nifty Midcap100 rose 1.3%, and Nifty Smallcap100 gained 0.85%.
The market breadth was skewed in the favour of the bulls. About 2,067 stocks gained, 1,701 declined, and 124 remained unchanged on the BSE.
Expert Take
“The market continued its exuberance and hit a fresh high amid the dovish commentary from the Federal Reserve, signalling at least three rate cuts in 2024. Further, the sharp fall in US bond yields improved investors’ confidence,” said Vinod Nair, Head of Research at Geojit Financial Services.
An upgrade in India’s GDP forecast, ease in global oil prices, and the RBI decision to clamp down inflation to the target level led to a broad-based rally with outperformance from Realty and IT, Nair said.
Rupak De, LKP Securities, said, “The index has broken out of consolidation, driven by an increase in long positions compared to short trades among participants. Sentiment remains robust as the index maintains a position comfortably above crucial moving averages. Support is situated at 21,000, where Put writers have significant position. Looking ahead, there’s a potential for the index to advance towards 21,400 and beyond on the higher side.”
Global Markets
MSCI’s broadest index of Asia-Pacific shares outside Japan shot up 1.8%, its biggest one-day percentage jump in a month although China had stumbled again and a stronger yen pushed Toyko down 0.7%.
The pan-European index advanced 1.2%, touching a near two-year high, and the euro zone’s top blue-chip index gained 0.7%, reaching an over 22-year high. France’s CAC-40 and Germany’s DAX also touched fresh all-time highs, up 0.9% and 0.7%, respectively.
Oil Impact
Oil prices rose on Thursday, extending the previous session’s gains, on a bigger-than-expected weekly withdrawal from US crude storage and a weaker dollar after the US central bank signalled lower borrowing costs for 2024.
Brent futures was up $1.4, or 1.95%, to $75.72 a barrel. US West Texas Intermediate (WTI) crude climbed $1.30, or 1.84%, to $70.75.
US Dollar Index Declines
The US dollar index, which measures the greenback against a basket of currencies, fell 0.3% to 102.57.
When the index falls, investors in the US see an opportunity for higher returns in India, which leads to an inflow of Foreign Institutional Investment (FII).
Rupee Closes Stronger
The Indian rupee closed stronger on Thursday but lagged behind its Asian peers that sharply rallied after the US Federal Reserve delivered a dovish hold on policy rates on Wednesday.
The rupee ended at 83.33 against the US dollar, up by 0.08% compared to its close of 83.40 in the previous session.
(With inputs from agencies)
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