Tuesday, May 28, 2024

Markets rally as US inflation remains soft; Sensex surges 677 points

Benchmark Indices Soar on Hopes of US Rate Cuts: Sensex Gains 677 Points

The benchmark indices surged nearly one percent on Thursday, fueled by softer-than-expected US consumer inflation data that renewed hopes of two interest rate cuts in 2024. The Sensex closed the session at 73,664, marking a gain of 677 points or 0.9 percent, while the Nifty ended at 22,404, with a gain of 203 points or 0.9 percent. This marked the biggest gain for both indices since April 29.

Throughout the trading session, the Sensex fluctuated between 72,530 and a high of 73,750 as moderating inflation data kept sentiment positive. However, sustained selling by foreign funds and election uncertainty led to volatility in the market.

Foreign portfolio investors (FPI) sold shares worth Rs 777 crore, while domestic institutional investors (DIIs) provided buying support of Rs 2,128 crore. FPIs have already sold shares worth nearly $3.5 billion (Rs 28,000 crore) this month amid uncertainties surrounding US rate cuts and a shift of investments from India to China due to favorable valuations.

Experts believe that the latest US inflation data will support emerging market stocks, with investors expecting around two rate cuts this year. “As soon as clarity emerges that inflation in the US is trending down consistently, and rate cuts are on the horizon, the market will find support,” said Saurabh Mukherjea, founder of Marcellus Investment Managers.

Leading the gains were shares of HDFC Bank, rising 1.5 percent and contributing significantly to the Sensex and Nifty gains. Infosys followed with a 2.3 percent increase. Sector-wise, all 13 sectoral indices compiled by the BSE ended with gains, with IT stocks among the best performers due to their dependence on the US economy’s prospects.

Overall, market breadth was mixed, with 2,040 stocks advancing and 1,798 declining. The combined market capitalization of BSE-listed firms rose by Rs 3.1 trillion to Rs 407.4 trillion. Traders are advised to adjust their strategies based on the participation of major players in the banking and IT sectors and cues from the US markets.

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