India’s benchmark indices rallied on Friday, mirroring gains in global equities, after the latest US economic data allayed fears of recession in the world’s biggest economy. The continued buying support from domestic investors added to the market buoyancy.
The Sensex rose 1,331 points, or 1.7 per cent — the biggest single-day percentage gain for the index since June 7, to end the session at 80,437. The Nifty 50 index, on the other hand, settled at 24,541, up 397 points, or 1.7 per cent, from the previous close. This was the biggest one-day gain for the 50-share index since July 26. The market capitalisation of all BSE-listed companies rose by Rs 7 trillion to Rs 451.6 trillion on Friday.
Both indices ended the week with gains after posting declines in the previous two weeks.
The Sensex and the Nifty also closed at their highest levels since August 2. On August 5, the domestic markets had crashed nearly 3 per cent amid a global selloff triggered by weak US jobs data and fears of recession.
Most global markets have recouped all the losses since then, as the latest data on jobless claims and retail sales in the US supported hopes that the world’s biggest economy is on its path to containing inflation while seeing healthy economic growth.
Domestic institutional investors (DIIs) and foreign portfolio investors (FPIs) were net buyers of Indian equities to the tune of Rs 2,606 crore and Rs 767 crore, respectively. So far in 2024, DIIs have been net buyers of shares worth Rs 2.95 trillion, as against FPI buying of Rs 16,123 crore.
According to the official US data, unemployment benefit applications fell for a second week to the lowest level since early July. Initial claims declined by 7,000 to 227,000 for the week ended August 10. Separately, US retail sales rose by the most since early 2023.
The value of purchases without adjusting for inflation rose 1 per cent in July due to a revival in car sales. The sales data revealed that demand is rising despite higher borrowing costs and an uncertain economic outlook.
Recent statements of US monetary policy officials further boosted optimism about an imminent rate cut by the Federal Reserve.
“Markets are latching onto any bit of positive news flow that’s out. Now, the expectations of a soft landing are back. Market trajectory will largely depend on global events. In the near term, Jerome Powell’s statement in the Jackson Hole meeting next week will be keenly watched by investors,” said Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies.
The India Vix, a gauge of market volatility, declined 6.7 per cent and was trading at 14.4. For the first time since August 2, the ‘fear gauge’ has ended below 15.
The market breadth was positive, with 2,414 stocks advancing and 1,527 declining. IT stocks were among the best performers, with its sectoral gauge rising nearly 3 per cent.
HDFC Bank, which rose 1.5 per cent, was the biggest contributor to the Sensex gains, followed by ICICI Bank, which rose 2.2 per cent.
“Investors are advised to remain cautious in the short to medium term. The focus will be on value stocks in sectors like FMCG, IT, pharma, and telecom,” said Vinod Nair, head of research at Geojit Financial Services.
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