Sensex reclaims new highs, powered by its best week of 2024 as NDA 3.0 takes shape, Nifty 10% off Tuesday's low

In the broader market, BSE Midcap closed over 1 percent while BSE Smallcap gained over 2 percent.

Sensex managed to overcome wild swings this week to reclaim new highs, and post its strongest week of 2024. The benchmark indices recorded a 3 percent gain since last Friday, rising as much as 10 percent from Tuesday low, the day when election-related jitterines had spooked investors. Finally, on Friday, the Sensex touched an all-time high of 76,795, and Nifty 50 came within 18 points of its record peak of 23,338 during the trading session.

Clarity emerged on Government formation, with NDA allies expressing support for PM-elect Narendra Modi to lead for a third term, thus helping the sentiment.

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"The anticipation of stability within the coalition government at the centre, coupled with the RBI's upward revision of its growth forecast for FY25 to 7.2 percent, fueled a broad-based rally in the domestic market," said Vinod Nair, Head of Research, Geojit Financial Services.

Friday Frenzy

At close, the Sensex was up 1,618 points or 2.2 percent at 76,693 and the Nifty 50 was up 468 points or 2.1 percent at 23,290. About 2,586 shares advanced, 810 shares declined, and 80 shares remained unchanged.

Analysts also attributed the surge in the benchmarks to the unexpected rally in IT stocks. Comfortable valuations were cited as the primary reason for renewed interest in the IT sector, which had seen limited gains over the past 1.5-2 years.

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Nifty IT surged by 3.5 percent on June 7, with Infosys, Tech Mahindra, and TCS leading the gains. The sectoral index saw its best week in four years, rising as much as nine percent since last Friday.

All sectoral indices except PSU Bank and the PSU index ended higher for the week, with Nifty Auto, Nifty Energy, Nifty Infra, Nifty Metal, and Nifty Realty rising over 2 percent on Friday.

On Nifty 50 index, as many as 41 stocks clocked positive returns on weekly basis.

In the broader market, BSE Midcap closed over 1 percent while BSE Smallcap gained over 2 percent.

MPC Day

The surge came on a day when the Reserve Bank of India's Monetary Policy Committee decided to keep the policy rates unchanged at 6.5 percent for the 8th consecutive time. Market participants saw this as a non-event.

The central bank also raised India's FY25 real GDP forecast to 7.2 percent from the earlier 7 percent.

Cues to Track

After the allocation of ministrial berth takes place over the next few days, markets may shift their focus to monsoon, Q1FY25 earnings, GDP growth, GST collection, and flows, said Gaurang Shah, SVP, Geojit Finacial Services.

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