Stock market today: The Indian stock market's frontline indices - the Sensex and the Nifty 50 - hit their fresh record highs during the session on Thursday, June 13, buoyed by healthy macroeconomic numbers, fueling optimism about the strength of India's economic growth outlook for the medium to long term.
During the session, the Sensex hit a fresh record high of 77145.46, while the Nifty 50 scaled a fresh peak of 23,481.05.
Eventually, the Sensex closed at 76,810.90, up 204 points, or 0.27 per cent, while the Nifty 50 settled with a gain of 76 points, or 0.33 per cent, at 23,398.90. Thus, both indices settled at their fresh record closing high levels.
The market witnessed gains across segments as the second-run indices, the BSE Midcap and the BSE Smallcap, also hit their fresh record highs of 45,576.53 and 50,707.92, respectively, on Thursday.
The BSE Midcap index finally closed 0.79 per cent higher at 45,521.86, while the Smallcap index ended with a gain of 0.89 per cent at 50,678.94.
The overall market capitalisation of the firms listed on the BSE rose to nearly ₹431.7 lakh crore from nearly ₹429.3 lakh crore in the previous session, making investors earn about ₹2.4 lakh crore in a single session.
Nearly 300 stocks, including Bharti Airtel, Tata Steel, Cipla, Divi's Labs, TVS Motor, Varun Beverages and UltraTech cement, hit their fresh 52-week highs in intraday trade on BSE.
Nifty 50 has been hitting fresh record highs this week after the election outcome and the formation of the BJP-led NDA government.
Let's take a look at the five key factors that are underpinning market sentiment:
Falling to the lowest level in the last 12 months, India's consumer price index (CPI)- based inflation, also known as retail inflation, fell to 4.75 per cent in May. India's retail inflation has stayed below 5 per cent since March. Experts observe retail inflation is slowly reaching the RBI's 4 per cent target level. However, food inflation remains a concern.
Also Read: Retail inflation eases, factory output ticks higher in May, boosting Indian economy
In the US also, inflation eased more than expected. The US annual consumer price index (CPI) came in at 3.3 per cent in May, down 0.1 percentage point from April’s 3.4 per cent. The monthly inflation rate remained flat at 0 per cent, down from 0.3 per cent in April. Economists polled by Reuters had forecast the CPI would edge up 0.1 per cent in May.
"The domestic equity benchmark traded with a modest gain, with domestic CPI data indicating that inflation is on a slow track of decline. A similar trend is reported in the US CPI, which brought down the market expectation from 2 rate cuts in CY24 to 1, which is having a mixed effect on the global markets," said Vinod Nair, Head of Research, Geojit Financial Services.
The Nifty 50 has been on a record-setting spree since the BJP-led NDA government formed. This upward trend has been supported by expectations that the new government will be able to ensure political stability and policy continuity. The BJP has signalled that policy reforms will continue by keeping key ministry portfolios unchanged.
"The entire cabinet formation signals an important thing—the policy continuity of the BJP-led NDA government. All the key ministries are with the BJP," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Experts expect the government to maintain fiscal prudence. They hope the upcoming Budget will further outline plans to boost infrastructure and capex-led projects.
Also Read: Nifty 50 hits a fresh record high: Can it touch 24,000 before the Union Budget 2024?
Experts expect the RBI to cut rates in October as inflation has cooled off significantly.
"In India, May CPI inflation has declined to 4.75 per cent and core inflation has come at only 3.1 per cent. This paves the way for a rate cut by the MPC in October," said Vijayakumar.
There may also be one rate cut in the US by the end of the year.
While keeping the benchmark interest rates unchanged at 5.25 - 5.50 per cent for the seventh straight meeting on Wednesday, June 12, the US Federal Reserve signalled that one rate cut could occur this year.
"We believe that the Fed has shown a tinge of dovishness in its commentary, with the reaction to incoming data expected to be much quicker than earlier. This should keep risk-on assets such as equities supported in the near term. With no indication of the timing of a rate cut, we sense that the chatter surrounding a rate cut in September is still not off the table, given yesterday’s softness in consumer price inflation," said Manish Chowdhury, Head of Research, StoxBox.
India Meteorological Department (IMD) has predicted an above-normal monsoon this year. Experts hope the timely arrival of monsoons and abundant rains will ease inflationary pressure and underpin India's economic growth.
Monsoon is crucial for India's agricultural sector, which contributes about 14 per cent to the country's gross domestic product (GDP). Around 56 per cent of the net cultivated area and 44 per cent of food production depend on monsoon rainfall. Therefore, monsoon is critical for healthy crop production, which helps maintain food prices and support growth.
Also Read: Southwest monsoon is on time, heat waves delay progress in east India: IMD official
The prospect of an above-normal monsoon is an important factor which makes the medium-term outlook of the Indian stock market attractive.
The Nifty 50 has been consolidating in a broad range, and experts point out that the index is trying to give a directional breakout.
Rupak De, Senior Technical Analyst at LKP Securities, pointed out that the Nifty 50 has been consistently flat for the last four days, indicating a pause before a sharp move.
"From here, a decisive move above 23,500 might lead to the covering of call writing, which could take the index higher towards 23,800. On the lower end, support is placed at 23,300, below which the index might weaken," said De.
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, pointed out that on the daily charts, the Nifty 50 has been consolidating in the range of 23,200 – 23,500. A decisive close beyond these boundaries can lead to a trending move.
"The hourly momentum indicator still has a negative crossover, which is a sell signal, and hence, the rallies are fizzling out at higher levels. The ideal strategy would be to take a contrarian bet at the extremes of the range and square off when prices are around the other extreme," said Gedia.
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