Indian Indices Surge to Record Highs on IT Stock Rally and Favorable US Inflation Data

Mumbai: India’s main stock indices closed at new record levels on Friday, driven by a strong performance in IT stocks following robust earnings reports and favorable US consumer inflation data. Despite concerns about high valuations in some areas, analysts remain optimistic about continued market momentum.

Key Details:

• The NSE Nifty gained 186.20 points, or 0.77%, ending at 24,502.15 after reaching an all-time high of 24,592.20 during the day.
• The BSE Sensex rose by 622 points, or 0.78%, closing at 80,519.34, just off its peak of 80,893.51 earlier in the session.

Market Drivers:

• Sunny Agrawal from SBICAP Securities attributed the Nifty’s climb to TCS’s better-than-expected Q1 results and positive outlook. The IT sector surged following these developments.
• US Consumer Price Index inflation eased to 3% in June, slightly below expectations of 3.1%, prompting expectations of potential interest rate cuts by the US Federal Reserve in 2024.

Sector Performances:

• The Nifty’s IT index surged by 4.53% on Friday, driven by gains in major IT firms like TCS, Wipro, HCL Technologies, Infosys, Tech Mahindra, and LTI Mindtree.
• Analysts, including Rohit Srivastava from indiacharts.com, maintain a bullish outlook, favoring sectors like IT, banks, pharmaceuticals, autos, and realty in the near future.

Investor Activity:

• Foreign portfolio investors (FPIs) bought Rs 4,022 crore worth of shares on Friday, while domestic institutions sold Rs 1,651 crore. July saw FPIs purchasing Rs 19,374 crore in stocks, compared to Rs 26,565 crore in June.

Advice for Investors:

• Analysts advised caution in sectors with inflated valuations such as rail and defense, suggesting reallocating investments to sectors with strong earnings potential like IT, pharmaceuticals, banking, auto ancillary, and metals and mining.