Market hits new peak: Sensex breaches 84K level, Nifty eyes 26K milestone
NEW DELHI: Indian equity markets on Friday joined the global rally prompted by the Federal Reserve's rate cut and encouraging payroll data from the United States.
The benchmark indices hit record highs, with investors’ wealth growing by a remarkable ₹6.24 lakh crore.
At the close, the BSE Sensex was up 1,359.51 points, or 1.63%, at 84,544.31, while the NSE Nifty surged 375.20 points, or 1.48%, to 25,791. The market capitalization of BSE-listed firms rose by ₹6,24,468.11 crore to ₹4,71,71,745.83 crore (USD 5.65 trillion).
The broader market also participated in the rally, with the BSE midcap and BSE smallcap indices each climbing by 1%.
"The much-anticipated 50 bps Fed rate cut has finally materialized, with signals from the Federal Reserve indicating additional cuts in 2024, 2025, and 2026. Markets have responded positively, as this could prompt a shift from debt to equities, potentially leading to a melt-up scenario,” said Sunil Damania, Chief Investment Officer at MojoPMS.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, stated, “Markets were on a roll due to across-the-board buying, as the US interest rate cut has triggered a downward spiral in both Indian and US bond yields, making India's financial assets more attractive.” Foreign institutional investors (FIIs) bought shares worth ₹14,000 crore (net figure) on Friday, according to NSE data.
The rally in the Indian market followed a record high for the US equity benchmark S&P 500 on Thursday. The Dow Jones Industrial Average closed above 42,000 for the first time, and the tech-heavy Nasdaq surged 2.51%.
Coupled with the rate cut, investors welcomed US unemployment claims data, which dropped to their lowest level in four months at 219,000 for the week ending September 14.
This raised confidence among investors that the Fed is engineering a soft landing for the economy and that there is no near-term danger of a recession.
Asian markets were also trading higher, with Japan’s Nikkei up around 2% and the Hang Seng climbing nearly 1%.
Ajit Mishra, SVP of Research at Religare Broking, noted that the market continues to closely follow global cues, especially from the US, whose recent strength enabled the Nifty to break through the 25,550 resistance level.
“Attention is now focused on the next milestone of 26,000. Sector-wise, we maintain our preference for banking, financials, auto, and realty, while advising a selective approach in other sectors. Additionally, emphasis should remain on index heavyweights and large midcaps for long positions,” Mishra added.
All sectoral indices ended with gains on Friday, with metals and autos leading the charts. ICICI Bank shares surged more than 4% on Friday after IIFL Alternative Research indicated that India is likely to receive $1 billion in net equity inflows as the FTSE All-World and FTSE All-Cap indices undergo semiannual rebalancing. The private lender alone is expected to see an inflow of $236 million.
Meanwhile, the Nifty Bank surged nearly 3% this week, hitting a record high on Friday. Among Nifty50 stocks, Mahindra & Mahindra, Shriram Finance, and NTPC emerged as top gainers.
Damania added that going forward, market sentiment will remain sensitive to geopolitical developments, corporate earnings growth, and the health of the global economy. Weak crude and copper prices raise concerns about the robustness of the global recovery. Currently, ample liquidity is driving indices higher, and we see no immediate catalyst that could significantly reduce this liquidity, he said.
