Stock Market Today: The Indian equity market’s main indices, Sensex and Nifty 50, hit fresh record highs during trade on Thursday, June 13, supported by healthy macroeconomic data, boosting optimism about the strength of India’s economic growth prospects in the medium to long term.
During trade, the Sensex index hit a fresh record high of 77,145.46 while the Nifty 50 index recorded a fresh high of 23,481.05.
Finally, the Sensex index closed at 76,810.90, up 204 points or 0.27 percent, while the Nifty 50 index closed at 23,398.90, up 76 points or 0.33 percent, thus closing at fresh record highs.
The market witnessed gains across all segments with second-tier indices BSE Midcap and BSE Smallcap also hitting fresh all-time highs of 45,576.53 and 50,707.92 respectively on Thursday.
The BSE midcap index finally ended at 45,521.86, up 0.79 per cent, while the smallcap index ended at 50,678.94, up 0.89 per cent.
The total market capitalization of all companies listed on the BSE is approximately ₹From nearly 43.17 crore. ₹42.93 crore in the previous session, while investors have invested around ₹2.4 lakh crores per session.
Around 300 stocks including Bharti Airtel, Tata Steel, Cipla, Divis Labs, TVS Motor, Varun Beverages and UltraTech Cement hit their fresh 52-week highs in intraday trade on the BSE.
Also Read: Top Gainers and Losers Today, June 13, 2024: Shriram Finance, HDFC Life Insurance Company, Hindustan Unilever, Axis Bank are the most active stocks. Check the full list here
The Nifty 50 has been hitting fresh record highs this week following the election results and the formation of the BJP-led NDA government.
Let’s look at five key factors underpinning market sentiment.
1. Sustained inflation relief
India’s Consumer Price Index (CPI) based inflation, also known as retail inflation, fell to its lowest level in the last 12 months, to 4.75% in May. India’s retail inflation has remained below 5% since March. Experts are of the view that retail inflation is gradually approaching the RBI’s target level of 4%. However, food inflation remains a concern.
Related article: Retail inflation eases, factory output rises slightly in May, boosting Indian economy
In the United States, inflation also eased more than expected. The U.S. Consumer Price Index (CPI) rose 0.1 percentage point to 3.3% year-on-year in May from 3.4% in April. Monthly inflation was stable at 0%, down from 0.3% in April. Economists surveyed by Reuters had expected the CPI to rise 0.1% in May.
“Domestic equity indices traded with marginal gains and domestic CPI data indicates a gradual downward trend in inflation. A similar trend was reported in the US CPI as well, leading to market expectations being lowered from two rate cuts to one in FY24, creating mixed effects for global markets,” said Vinod Nair, head of research at Geojit Financial Services.
2. Expectations for policy continuity
The Nifty 50 index has been on a record high rally since the BJP-led NDA government came to power. This upward trend is fuelled by hopes that the new government will be able to ensure political stability and policy continuity. The BJP has signalled its intention to continue with policy reforms by leaving key ministries unchanged.
“The new cabinet formation signals a significant continuity in the policies of the BJP-led NDA government. All the key ministries are with the BJP,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Experts expect the government to maintain fiscal prudence. They expect the next budget to further outline plans to boost infrastructure and capital expenditure-led projects.
Also Read: Nifty 50 hits new high: Can it reach 24,000 by Union Budget 2024?
3. Expectations of interest rate cuts
Experts expect the Reserve Bank of India to cut interest rates in October as inflation has slowed significantly.
“In India, CPI inflation eased to 4.75 per cent in May while core inflation stood at just 3.1 per cent. This paves the way for a rate cut by the MPC in October,” Vijayakumar said.
The US could also see one interest rate cut by the end of the year.
On Wednesday, June 12, the U.S. Federal Reserve (Fed) kept interest rates unchanged at 5.25% to 5.50% for the seventh consecutive meeting, signaling the possibility of one rate cut this year.
“The Fed has displayed a dovish tone in its comments and we expect them to react much faster to upcoming data than before. This will support risk-on assets such as stocks in the near term. No timeline for a rate cut has been given but given the softness in CPI inflation yesterday we feel the chatter around a September rate cut has not died down yet,” said Manish Chowdhury, head of research at Stoxxbox.
4. Above-normal monsoon expected
The India Meteorological Department (IMD) has forecast a better than normal monsoon this year, with experts hoping that timely arrival of the monsoon and abundant rains will ease inflationary pressures and support India’s economic growth.
The monsoon is crucial to India’s agriculture sector, which contributes to around 14% of the country’s Gross Domestic Product (GDP). Around 56% of the net cultivated area and 44% of food production depend on monsoon rains. The monsoon is therefore vital for healthy crop production, which helps maintain food prices and support growth.
Related article: Southwest monsoon on schedule, heatwave delays progress in eastern India: India Meteorological Department official
The prospect of above-normal monsoon rains is a key factor that makes the medium-term outlook for the Indian equity market attractive.
5. Technical Factors
The Nifty 50 has been consolidating in a broad range with experts pointing out that the index is attempting a directional breakout.
Rupak De, senior technical analyst at LKP Securities, pointed out that the Nifty 50 has been consistently sideways for the past four days, indicating a pause before any sharp move.
“A decisive move above 23,500 from here could lead to call selling covering and the index could rise towards 23,800. On the lower end, 23,300 is the support level below which the index may weaken,” De said.
Jatin Gedia, technical research analyst at BNP Paribas Sharekhan, noted that on the daily chart, Nifty 50 is trending within the range of 23,200-23,500.A decisive close above this boundary could signal a trend move.
“Hourly momentum indicators are still pointing to a negative crossover, which is a sell signal, so the rally is losing momentum at the highs. An ideal strategy would be to place contrarian bets at either extreme of the range and close the trade when the price is near the other extreme,” Ghedia said.
Find all market news here
Disclaimer: The views and recommendations expressed are those of the individual analysts, experts and brokerage firms and not of Mint. You are advised to consult a qualified professional before making any investment decisions.
3.6 Million Indians visited us in a single day and chose us as their platform for Indian general election results. Check out the latest updates here!
