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The Indian stock market experienced a dramatic surge on September 12th, with the Nifty 50 index reaching an all-time high of 25,433.35 and the Sensex also marking a milestone at 83,116.19. This surge was driven by a strong performance in banking, IT, and auto sectors, leading to a robust final hour rally ahead of the weekly derivatives expiry.
Nirav Harish Chheda, a Technical and derivatives analyst at Nirmal Bang, attributed the surge to short covering, explaining that investors had to cover their short positions due to the rising market. This led to a rapid increase in the indices' values.
The market breadth remained positive, with more shares advancing than declining. The surge in the market was fueled by optimism surrounding foreign inflows into Indian equities, boosted by US inflation data that strengthened the case for a 25-basis-point Federal Reserve rate cut.
All 13 major sectoral indices saw gains, with Nifty Infra, Nifty Auto, and Nifty Energy leading the way with increases exceeding 2 percent. IT companies, heavily reliant on the US market, also rose by over a percent. The BSE Midcap and BSE Smallcap indices also experienced growth, indicating a broader market upswing.
US consumer prices showed a slight uptick in August, with core inflation remaining sticky. The probability of a 25 bps Fed rate cut at the September 17-18 meeting rose to 85 percent from 66 percent the previous day, while the likelihood of a 50 bps cut decreased to 15 percent from 34 percent.
Investors are now looking towards India's CPI data, scheduled to be released after market hours. This data could potentially add another layer of excitement to the already eventful market action.