Benchmark indices registered their biggest single-day gain of the month on Friday, as hopes of the US Federal Reserve beginning its rate cut cycle in September picked up pace. This optimism comes in the backdrop of US data showing that annual retail inflation in the world’s largest economy eased below 3% in July for the first time since 2021.
The Sensex surged 1,330.96 points or 1.7% to close at 80,436.84 and the broader Nifty also jumped 397.40 points or 1.7% to 24,541.15. While this was the biggest single-day gain for the Sensex since June 7, for Nifty, it was the best day since July 26.
The markets snapped a two-week losing streak with broad-based gains with all sectoral indices closing in the green, while the fear gauge – India VIX – eased nearly 7%. The biggest gainers were information technology, real estate, automobile and financial services firms.
Trent, BEL may see $900-Million inflow on potential Nifty inclusion SEBI grapples with rising unrecovered dues Stock Market Highlight: Markets end flat! Nifty below 24,600, Sensex flat; Bank Nifty down 100 points Ola Electric shares hit 20% upper circuit after HSBC initiates coverage with ‘Buy’
While domestic institutional investors (DIIs) bought shares worth Rs 2,606.18 crore, foreign portfolio investors (FPIs) purchased shares to the tune of Rs 766.52 crore, according to a provisional data. This was only the third session where FPIs have been buyers in India so far in August.
Also Read
HDFC Bank and ICICI Bank contributed 25% to the Sensex’s gains, while IT majors Infosys and Tata Consultancy Services made up 17% of the gains.
“Despite all the recent drama, including the unwinding of the yen carry trade, ongoing geopolitical tensions in West Asia and the new Hindenburg report, the market is merely taking a pause. There’s nothing alarming at this point,” said Krishna Appala, senior research analyst at Capitalmind Research.
Thanks to Friday’s rally, the Sensex ended the week with 0.9% gains and the Nifty rose 0.7%.
The market had seen sharp bouts of volatility last week. Concerns about a potential recession in the US had also caused nervousness among investors.
Shrikant Chouhan, executive vice president and head of equity research at Kotak Securities, said that after the US inflation data, there is some relief that the Fed won’t cut rates aggressively, which is positive for the yen.
Elara Capital said it is closely watching the yen-denominated flows in India. “For the first time since beginning of the yen carry trade, we have seen small redemptions from yen-denominated funds over the past 2 weeks,” it said.
The gains in the broader market were also in line with the benchmark indices on Friday. The BSE Smallcap index rose 1.7%, while the BSE Midcap index gave 1.8% returns.
Also Read
Chouhan said India will continue to be more dependent on global news flow now rather than domestic events. High valuations and modest earnings growth in the April-June quarter could keep FPI inflows limited in India.
However, Kotak Institutional Equities pointed out that given the euphoric sentiment among non-institutional investors, earnings are less relevant in the current sentiment-laden market, with the market rewarding modest beats in certain cases and ignoring large misses.
