Tech stock rally drives mkts to fresh highs; Nifty a whisker away from 25K

The stock markets extended their winning run for the fourth straight session on Thursday, with benchmark Sensex breaching the 81,000 mark for the first time and Nifty scaling the record 24,800 level led by IT stocks.

Strong inflows from foreign portfolio investors (FPIs) amid positive global cues also underpinned gains.

The Sensex closed at 81,343, with a gain of 627 points, or 0.8 per cent. From the intra-day lows, the index climbed nearly 1,000 points. The Nifty50 index rose 188 points, or 0.76 per cent, to end the session at 24,801, a gain of 0.8 per cent. The index is now less than a per cent away from hitting the 25,000 milestone.

 

IT bellwether Tata Consultancy Services (TCS) was the biggest gainer in the Sensex pack and the biggest contributor to index gains, followed by Infosys.

TCS gained 3.3 per cent, and Infosys rose 1.9 per cent. TCS stock gained 10 per cent since it declared its quarterly results last week, lifting the IT pack. The Nifty IT index has jumped over 7 per cent during the same period. The IT titan's stock surged after its first quarter results for 2024-25 surpassed analyst expectations.

The latest boost, however, came from LTIMindtree's better-than-expected results. The rally in the IT stocks could sustain as Infosys, whose quarterly results were announced post-market hours, raised its revenue guidance for 2024-25 (FY25) to 3-4 per cent, an upward revision from the 1-3 per cent the company had guided in the last quarter of FY24.

Analysts said the upbeat guidance from India's second-largest software exporter by revenue suggests a boost in technology spending due to a resilient global economy.

"Both the IT bellwethers are showing single-digit growth. But expectations were low because of the slowdown in the global economy. They have done alright but nowhere near what they achieved in the past. This is a relief rally because of that,” said UR Bhat, co-founder of Alphaniti Fintech.

Regarding the robust buying by FPIs, Bhat said they have withdrawn a lot in the cash segment from India in the past few years, and the confidence in earnings growth is perhaps bringing them back. The FPIs on Thursday were net buyers of Rs 5,484 crore.

In India, the equity market is largely on an upward trajectory after a brief but sharp decline on the day of the Lok Sabha election results on June 4. From election result-day lows, the Nifty has jumped over 16 per cent, buoyed by hopes of policy continuity and strong macroeconomic indicators.

The market's trajectory will now depend on whether the FPI flows continue and the union budget next week.

"There is value in the IT sector, and maybe the worst is behind them now in terms of growth and margins. Markets might consolidate at these levels, and we may see some sectoral rotation," said Andrew Holland, CEO of Avendus Capital Alternate Strategies.

Overall market breadth, however, was weak, with 2,549 stocks declining and 1,372 advancing. More than two-thirds of Sensex stocks gained. Bajaj Finserv and Mahindra were the best-performing stocks after TCS.

The market capitalisation of all BSE-listed companies rose to Rs 454 trillion.