The stock market witnessed a jubilant close on Friday as both the BSE Sensex and Nifty50 reached unprecedented highs, concluding the week on a bullish note. The rally was predominantly fueled by a remarkable surge in IT stocks following stellar performances by industry giants TCS and Infosys, which exceeded financial expectations for the third quarter.
The 30-share BSE Sensex experienced a notable climb of 1.18%, or 847.27 points, culminating in a record high of 72,568.45 at the end of the trading session. Intra-day, the index reached a peak of 72,720.96, reflecting a substantial 1.39% increase.
Similarly, the Nifty50 exhibited an upward trajectory, rising by 1.14% or 247.35 points to achieve a lifetime closing high of 21,894.55. Intra-day, it marked a fresh record of 21,928.25, indicating a 1.29% surge.
The impetus behind this surge can be attributed to the outperformance of IT stocks, with TCS and Infosys delivering results that surpassed market expectations. Narendra Solanki, Head Fundamental Research – Investment Services at Anand Rathi Shares and Stock Brokers, noted that the positive sentiments across the IT sector, coupled with heavy buying at IT and tech counters, contributed significantly to the indices’ robust gains. The rally was further supported by follow-up buying in realty, oil and gas, and PSU banks, adding strength to the overall market.
Vinod Nair, Head of Research at Geojit Financial Service, emphasized the influential role played by the IT sector in propelling the market to unprecedented levels. The positive signs of recovery within the IT industry, along with an optimistic forecast for BFSI in FY25, had a favorable impact on market sentiments. Additionally, the strong performance of PSU banking stocks was underscored by their natural alignment with the current business cycle.
The market’s exuberance extended to the market capitalization of all stocks listed on BSE, witnessing a significant rise of approximately Rs 3 lakh crore to reach Rs 373.4 lakh crore. In dollar terms, the Indian stock market approached the $4.5 trillion mark, positioning itself as a potential contender to surpass Hong Kong as the world’s fourth-largest hub of equities.
Surprisingly, the market seemed unfazed by higher-than-expected US inflation and positive job data, which had tempered expectations for an immediate rate cut by the US Federal Reserve. The US market remained relatively stable, and Japan’s Nikkei share average reached a fresh 34-year peak on the same day.
Steady inflows into mutual funds and buying by retail investors further supported the market. Recent data indicated that domestic institutional investors were net buyers, contributing more than Rs 1,600 crore.
Another contributing factor to the rally was the notable jumps observed in both Nifty PSU Bank and Nifty Realty, each witnessing increases of around 2-3%. Investors remained optimistic about the growth outlook for these sectors in the near term.
Despite the celebratory atmosphere, the sustainability of this rally remains uncertain. The ongoing earnings season for the December quarter is expected to be a crucial factor influencing market returns in the near term. The substantial increase in the shares of Reliance Industries (RIL) over the past three sessions, totaling over 6%, has also supported the overall index. Investors are keenly awaiting HDFC Bank’s results on January 16th for further insights into the direction of Bank Nifty.
Infosys saw an impressive 8% rise following its December quarter earnings meeting market expectations. Tata Consultancy Services experienced a nearly 4% climb, buoyed by an 8.2% growth in net income for the same quarter, reaching Rs 11,735 crore.
The BSE Information Technology index demonstrated the highest jump among sectoral indices, rising by an impressive 5.06%. As the market continues to navigate through various factors influencing its trajectory, the performance of key players and sectors, along with global economic indicators, will be closely monitored by investors and analysts alike.