Markets gain for 5th day on FPI buying; IT, financial stocks lead rally

After gaining as much as 1.6 per cent from the previous day's close, the Sensex slipped into negative territory, only to recover sharply once again

Benchmark indices extended their winning streak to a fifth consecutive session on Thursday, driven by a strong revival in foreign portfolio investor (FPI) flows.

 

Optimism about the US economy drove information technology (IT) stocks to record highs, while financial stocks rallied on expectations of monetary policy easing by the Reserve Bank of India (RBI).

 

However, Thursday’s session saw intense volatility, particularly during the final hour of trade.

 

After rising as much as 1.6 per cent during the day, the Sensex briefly slipped into negative territory before recovering sharply. The 30-share Sensex closed at 81,766, up 810 points or 1 per cent, while the Nifty gained 241 points, or 1 per cent, to settle at 24,708.

 

 

Over the past five sessions, the Sensex has advanced 2.5 per cent, while the Nifty has climbed 3.3 per cent. The total market capitalisation (mcap) of BSE-listed firms increased by Rs 2.5 trillion on Thursday to reach Rs 458 trillion. In the past five sessions, mcap has risen by Rs 15 trillion. 

 

 

FPIs were net buyers of Indian equities worth Rs 8,540 crore on Thursday, marking the largest single-day inflow since November 25, when MSCI rebalancing occurred. Meanwhile, domestic institutions were net sellers to the tune of Rs 2,304 crore.

 

“FPIs turning buyers is positive for the market, particularly for largecaps. The strength in banking stocks could potentially push the Bank Nifty s all-time highs, which may help the Nifty move higher as well,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.

 

Most of the index gains came from IT heavyweights, with the Nifty IT index climbing 2 per cent to a new high. IT firms, which derive a sizeable portion of their revenue from the US, benefited from comments by US Federal Reserve Chair Jerome Powell, who said the US economy’s performance has been “remarkably good”.

 

“Valuation-wise, the IT pack looks more attractive than other sectors in the market,” said Ambareesh Baliga, an independent equity analyst.

 

Financial stocks also gained, bolstered by speculation that the RBI might announce accommodative measures in its monetary policy review on Friday, such as a rate cut or a reduction in the cash reserve ratio. Recent gross domestic product data revealed that economic growth had slowed to a six-quarter low of 5.4 per cent.

 

The market breadth was marginally positive, with 2,048 stocks advancing and 1,931 declining.

 

Among Sensex stocks, Infosys emerged as the top contributor to gains, rising 2.3 per cent, followed by ICICI Bank, which gained 1.4 per cent. Only three stocks on the index ended in the red. Looking ahead, US macroeconomic data will likely influence market sentiment.

 

“The recent rally already factors in potential RBI support, making the market’s reaction to Friday’s policy announcement pivotal. While IT and banking stocks have driven the indices higher, broader sectoral participation will be crucial for sustaining this rally. With the Nifty reclaiming 24,700 — a key level after its breakout above 24,350 — sustained momentum could pave the way for a move towards 25,100,” said Ajit Mishra, senior vice-president of research at Religare Broking.