The Indian stock market indices reached a new high during the Friday session due to various factors including the moderation in US inflation, strong results from TCS, and positive market fundamentals. The Sensex closed over 600 points higher at 80,519 points, while the Nifty closed 186 points higher at 24,502 points. Sectoral indices showed mixed performance on Friday. The unexpected fall in US consumer inflation in June raised hopes for an earlier interest rate cut, possibly in September.
Sensex and Nifty have both seen significant returns so far in 2024-25, with foreign and domestic institutional buyers playing a key role in supporting the stock markets. The positive market sentiment was driven by multiple factors including the strong performance from the IT sector and the decline in US inflation to a one-year low. The anticipation of a rate cut in September is also contributing to the optimism, as evidenced by the fall in the dollar index. Stock-specific moves are likely to gain traction during the ongoing earnings season and upcoming budget, with a focus on the IT sector due to its promising outlook.
The retail inflation rate in India softened marginally in May, continuing its downward trend, although food prices remained a concern for policymakers. Annual retail inflation in May hit a 12-month low of 4.75%, slightly down from 4.83% in April. While the retail inflation is within the RBI’s comfort level of 2-6%, it is above the ideal 4% scenario. India has effectively managed its inflation trajectory, unlike many other countries, including advanced economies.
Market participants are eagerly awaiting India’s June retail inflation data, scheduled to be released on Friday. The momentum is expected to continue, supported by healthy quarterly results, hopes of a rate cut, and a pre-budget rally. The IT sector will remain in focus as other major companies release their results. Key results expected next week include Jio Financials, HDFC Life, Asian Paints, Infosys, Wipro, and more. Additionally, market participants will closely monitor the policy decisions of the new government, particularly with the upcoming Budget presentation on July 23 by Finance Minister Nirmala Sitharaman.
