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The Indian stock market experienced a significant surge on a recent trading day, with both the Sensex and Nifty reaching record highs. This impressive performance was driven by a strong showing from heavyweight banking and IT stocks, indicating a positive sentiment towards the Indian economy. The Nifty 50 index reached a peak of 25,337 points, while the BSE Sensex also scaled an all-time high. This bullish trend reflects a growing confidence among investors in the Indian market.
The gains were broad-based, with the Nifty experiencing a 1.7% increase and the Sensex climbing by 1.5%. This surge in market value was further highlighted by the total market capitalization of listed companies on the BSE, which jumped by a staggering ₹6.6 lakh crore to reach ₹467.36 lakh crore. Key sectors contributing to the rally included IT, banking, auto, financial services, healthcare, and oil & gas, with all experiencing gains exceeding 1%.
The positive market performance coincided with the release of US consumer price index data, which showed a slight increase in August. While this indicates continued inflationary pressures, the data also suggests a potential slowdown in inflation, leading to expectations of an interest rate cut by the Federal Reserve. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the impact of this news, noting that the August CPI inflation figure coming in at 0.2% had lowered the 12-month inflation rate to 2.5% from 2.9%. This development increases the likelihood of a rate cut in September, although Vijayakumar cautioned that the continued high core inflation rate of 3.2% would likely lead to a cautious approach by the Fed, with a smaller rate cut of 25 basis points anticipated.
Adding to the positive sentiment, oil prices experienced a decline of over 10% in September, driven by factors such as weak Chinese demand and concerns over global oversupply. This fall in oil prices is expected to have a positive impact on Indian businesses and consumers, as it reduces input costs and fuel expenses. Narendra Solanki, Head of Fundamental Research at Anand Rathi Shares and Stock Brokers, attributed the market's positive opening to the buoyant performance of Asian markets, fueled by a tech-driven rally on Wall Street the previous day. He further pointed to China's decision to reduce rates by 50 basis points on mortgages as a key driver of the market's strength, noting that this move would likely boost consumption and provide a much-needed boost to sentiment.
Source: Sensex, Nifty at record high: Investors earn nearly ₹7 lakh crore today