© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
Written by Hitesh Vyas and Agneya Dhingra
Indian stock market indices Sensex and Nifty surged over 1.6 per cent on Friday as softer US inflation data raised hopes of rate cut in September by the US Federal Reserve.
The BSE’s Sensex rose 1.68 per cent, or 1,330.96 points to close 80,436.84 while Nifty 50 surged 1.65 per cent, or 397.4, to finish at 24,541.15.
The US CPI inflation rose 2.9 per cent for the 12 months ending July, the smallest 12-month increase since March 2021.
“Positive US economic data like cooling inflation and robust retail sales numbers shrugged off recession fears while talks of a rate cut by the US Fed as early as next month fuelled a mega rally across global equities, including India,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
While local markets remained in positive territory throughout the session, buying opportunities emerged for local investors after the recent slump with banking, IT, auto, metal and realty stocks leading the upsurge, he said.
“The stability of the JPY (Japanese Yen) has been instrumental in driving a global market recovery. Besides that, the strong US retail sales and a decline in weekly jobless claims have helped alleviate fears of a US recession. Further, the market sentiment has improved due to a decrease in the US CPI inflation,” said Vinod Nair, Head of Research, Geojit Financial Services.
On Thursday, Wall Street’s main indexes closed higher, with the Nasdaq rising more than 2 per cent after July US retail sales data hinted at resilient consumer spending, calming fears of an imminent recession in the world’s largest economy.
“Retail sales increased 1 per cent after a downwardly revised 0.2 per cent drop in June, easing fears of a sharp economic slowdown blown by a jump in the unemployment rate last week. A separate reading also showed the number of Americans filing new applications for unemployment benefits fell unexpectedly last week,” said Deepak Jasani, Head of Retail Research at HDFC Securities.
Domestically, the Indian CPI inflation rate has fallen below the estimate, signalling optimism.
After remaining above the 4 per cent mark for nearly five years, retail inflation slipped below this level to a 59-month low of 3.54 per cent in July mainly due to a high base effect, recent data released by the National Statistical Office (NSO) showed. Food inflation rate also slipped to a 13-month low of 5.42 per cent in July from 9.36 per cent in June.
“However, challenges such as a drop in WPI inflation, weak IIP, and lukewarm Q1 corporate earnings suggest that market gains may be limited, which is reflected by FIIs maintaining a net seller position,” Nair said.
During the week, broader domestic indices ended with gains. BSE Sensex, Nifty-50, BSE Midcap and BSE Smallcap indices posted weekly gains of upto 1 per cent.
On the sectoral front, BSE IT and BSE Realty index saw healthy weekly gains.
“BSE Metal index declined on a weekly basis as the Supreme Court allowed states to levy tax and royalty on minerals, apart from central duties, and collect past dues,” said Shrikant Chouhan, Head Equity Research, Kotak Securities.
The NSE firms that gained the most included Wipro Ltd (4.23 per cent), Tech Mahindra Ltd (3.98 per cent), Grasim Industries (3.65 per cent), Mahindra & Mahindra Ltd (3.45 per cent) and Tata Motors (3.36 per cent).
On Friday, foreign institutional investors (FIIs) bought Rs 766.52 crore worth of Indian equities, while domestic institutional investors purchased Rs 2,606.18 crore of shares.
