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Sustained inflows from foreign portfolio investors (FPIs), gains in information technology (IT) stocks, and supportive global cues took the benchmark S&P BSE Sensex across the 66,000 mark for the first time on Thursday. After reaching a high of 66,064, the markets saw profit booking, and the index settled more than 500 points lower from the day’s high. The Sensex ended the session at 65,559, with a gain of 165 points, or 0.25 per cent.
The National Stock Exchange Nifty, after climbing to 19,567, retreated to end the session at 19,413, with a gain of 29 points, or 0.15 per cent.
Global investors bet on equities as worries about rate hikes and the recession eased. The US inflation data released on Wednesday revealed that price rises have declined to a two-year low. The US Consumer Price Index (CPI) for June rose 3 per cent from a year ago, the smallest advance in two years.
The core CPI, which excludes food and energy and is considered a better marker of inflation, rose 4.8 per cent, the lowest since 2021.
Analysts said the US inflation figures showed progress in taming price rises amid easing demand and over a year of rate hikes by the US Federal Reserve (Fed). However, the inflation figures are still well above the Fed target, and the US central bank is likely to resume rate hikes in its July meeting, they added.
Federal Reserve Bank of Richmond President Thomas Barkin said on Wednesday that the Fed might end up doing more work when inflation becomes higher if it backs off too soon. Closer home, India’s retail inflation for June rose to 4.81 per cent, the highest in five months in the middle of erratic monsoons.
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The gains by IT majors also contributed to the index’s gains.
Infosys gained 2.4 per cent and Tata Consultancy Services (TCS) rose 2.47 per cent, contributing the most to index gains. The net profit of TCS, which announced its quarterly results on Wednesday, beat expectations, although its revenue fell short.
FPIs were net buyers of Rs 2,238 crore on Thursday, according to provisional data from exchanges. So far in July, FPIs have been net buyers of Rs 25,009 crore.
“The market’s medium- to long-term trajectory seems intact. However, in the near term, we could see markets take a breather. While the magnitude may not be very steep, markets seem to have discounted almost every positive news item, more so in the mid- and small-cap segments. Markets are likely to get more nuanced, and bottom-up stock picking will be key,” said Lakshmi Iyer, chief executive officer, investment and strategy, Kotak Investment Advisors.
The market breadth was weak, with 2,252 stocks declining and 1,211 advancing.
Apart from TCS and Infosys, ICICI Bank, which rose 1.3 per cent, and HDFC Bank, which rose 0.5 per cent, were the other significant contributors to Sensex gains. The 2023-24 April-June quarter earnings announcements could determine the market’s trajectory, observed analysts.
“Thursday’s domestic rally was supported by contra buying in IT stocks, supported by stable margins, new generation business opportunities, and an increase in pricing power due to moderation in the US dollar,” said Vinod Nair, head-research, Geojit Financial Services.
