The equity benchmarks Sensex and Nifty settled higher on Friday, tracking firm global cues and rising expectations of a US Federal Reserve rate cut on September 17.
Rallying for the fifth day in a row, the Sensex jumped 355.97 points or 0.44 percent to settle at 81,904.70. During the day, it surged 444.12 points or 0.54 percent to 81,992.85. The Nifty rallied 108.50 points or 0.43 percent to 25,114, registering its eighth straight day of uptrend.
Among Sensex constituents, Infosys rose up to 2 percent after the company’s board approved its largest-ever share buyback programme worth Rs 18,000 crore. Tata Motors, Maruti, Mahindra & Mahindra, Axis Bank and Larsen & Toubro also contributed to the gains.
Key drivers for the rally
1) US Fed rate cut hopes: Softer US jobs data reinforced expectations of a rate cut by the Federal Reserve on September 17, boosting investor sentiment globally. Lower US rates typically improve liquidity and risk appetite in emerging markets like India.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, noted "Globally stock markets are resilient drawing strength from the new records being set by the mother market US. The US market is bullish on expectations of rate cut from the Fed on September 17th. A 25 bp rate cut by the Fed is the near consensus now."
2) Strong global cues: Asian markets, including South Korea’s Kospi, Japan’s Nikkei 225, Shanghai Composite and Hong Kong’s Hang Seng, traded higher. US markets also ended in positive territory on Thursday.
3) GST cuts: The GST Council approved tax reductions on nearly 400 categories of products, representing about 16 percent of the consumer-price basket. The move continues to lift shares of consumer goods companies and automakers.
4) Crude oil decline: Brent crude futures fell 0.87 percent to USD 65.79 per barrel. Softer crude prices ease inflationary pressures and support corporate margins.
5) India VIX fall: The volatility index slipped 1.35 percent to 10.22, indicating reduced investor fear and supporting market stability.
Market breadth was positive with 2,012 shares advancing, 1,498 declining and 155 remaining unchanged.
Barring FMCG and PSU Bank, all major sectoral indices traded in the green. Realty, IT and metal stocks led the uptrend. The Nifty Smallcap100 and Midcap100 indices added up to 0.4 percent.
The IT index rose 0.4 percent, supported by the rally in Infosys. The metal index gained 0.78 percent, while realty advanced 0.4 percent.
Technical view
Anand James, Chief Market Strategist at Geojit Financial Services, said Nifty faces resistance near 25,012. "The positive close is in line with our view. Upsides remain towards 25,400, but approach of 25,100 may attract rejection trades. A fall below 24,700 could delay the momentum," he added.
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