Indian stocks opened at record highs on Thursday, with strong buying across the board on the back of positive global news. The benchmark Sensex index surged over 500 points to trade above 77,100, while the Nifty 50 rose over 0.5 per cent to around 23,480.
The broader market rally was supported by the Nifty Midcap 100 and Nifty Smallcap 100 indices, which rose over 0.5 per cent each to hit all-time highs.Bank Nifty index rose 115 points to trade above the 50,000 mark.
Sector-wise, Nifty IT, Nifty Realty, Nifty Metals, Nifty Auto, Nifty PSU Bank and Nifty Financial Services led the gains while only two indices — Nifty FMCG and Nifty Media — declined.
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HDFC Life Insurance, LTI Mindtree, Divis Laboratories, Shriram Finance and Wipro were the top gainers among the Nifty 50 constituents, while Tata Consumer Products, Britannia Industries, Hindustan Unilever, Cipla and Eicher Motors were the top losers.
The gains in the Indian stock market were driven by upbeat global and domestic economic data. Domestic stocks tracked gains in Asian and US equities following weaker than expected US inflation data and the Federal Reserve’s policy decision.
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The U.S. Consumer Price Index (CPI) was 3.3% in May, down 0.1 percentage point from 3.4% in April.
Meanwhile, the Federal Reserve kept interest rates unchanged for a seventh consecutive session on Wednesday, saying it had made “moderate” progress toward its 2% longer-term inflation goal. Federal Open Market Committee officials, led by Fed Chairman Jerome Powell, signaled they plan to cut interest rates just once this year.
Domestically, India’s retail price inflation, based on the Consumer Price Index (CPI), fell to 4.75% in May from 4.83% in April, the lowest in a year.
India’s factory output grew 5% in April, down from 4.9% in March and 5.6% in February.
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“There is good news on the inflation front in both the US and India. US CPI inflation fell to 3.3% in May, slightly below expectations, and month-on-month inflation was flat. However, the economy remains strong and there are no clear signs of easing in the labour market. Hence, Fed Chairman Jerome Powell has kept rates unchanged and has hinted at only one rate cut in 2024 and four cuts in 2025,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
In India, CPI inflation eased to 4.75% in May, while core inflation was just 3.1%, paving the way for a rate cut by the MPC in October. The inflation numbers suggest that the deflation process is well underway. From a market perspective, this is good news, especially for banking stocks, he added.
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