India's stock market made a strong comeback on the week-ended Friday, ending a five-day streak of declines. Both the BSE Sensex and the Nifty50 indices experienced significant gains, as investors showed renewed confidence despite recent Budget concerns.
The BSE Sensex surged by 1,292.92 points, or 1.62%, closing at 81,332.72. Meanwhile, the Nifty50 soared by 428 points, or 1.76%, reaching an all-time high of 24,861.15 during the day before settling at 24,834.85. This bullish trend was driven by strategic buying in major blue-chip stocks and an optimistic outlook on value investments.
Key Drivers of the Surge
The rally was fueled by increased buying interest in IT and metal stocks. Notable performers included Infosys, Tata Consultancy Services (TCS), and Reliance Industries, which all posted impressive gains. The recovery in the IT sector was particularly strong, with some stocks climbing up to 7%. This surge followed the release of data indicating better-than-expected growth in the US economy for the second quarter. Since many IT firms generate a significant portion of their revenue from the US, this positive economic data provided a substantial boost to the sector.
The Nifty Metal index also stood out as a top performer, appreciating by 3%. Major contributors to this index included Adani Enterprises, Vedanta, and Tata Steel. Collectively, these stocks played a pivotal role in driving market performance.
Impact of the Budget and Market Sentiments
Investors appeared to overlook the capital gains tax hike announced in the recent Budget, focusing instead on the potential for future gains. The overall market capitalization of BSE-listed companies surged by ₹6.92 lakh crore, reaching ₹456.74 crore. The bullish sentiment was evident as both the Sensex and Nifty50 indices rallied strongly during intra-day trading.
Global Market Overview
On the global stage, Asian markets were mostly lower, reflecting a cautious sentiment. Most equities on Wall Street also saw losses in a volatile overnight session. Investors are keenly awaiting the release of the US personal consumption expenditures (PCE) data, a key inflation gauge used by the Federal Reserve, to gauge the likelihood of future interest rate cuts.
Foreign institutional investors (FIIs) continued their net selling trend for the third consecutive session, with outflows amounting to approximately $1.3 billion since the Budget announcement. Despite this, the Indian market managed to push through with strong domestic buying.
Oil Prices and Economic Data
Oil prices experienced a slight increase, supported by robust US economic data that raised expectations for higher crude oil demand. Brent crude futures for September climbed 16 cents to $82.53 per barrel, while US West Texas Intermediate crude for September also rose by 16 cents, reaching $78.44 per barrel. However, concerns about weaker economic conditions in China and Japan, the largest economies in Asia, tempered these gains.
Overall, Friday's market performance reflected a resilient and optimistic outlook among investors, showcasing India's ability to rebound strongly from recent setbacks.
Market Updates Post Budget:
Budget 2024: LTCG Tax Raised to 12.5%, Markets React with Sharp Decline
Stock Market: Economic Survey 2024 Highlights Risks and Challenges of Futures & Options Trading