Sensex hits record high, Nifty ends near 23,300; IT shares rally

The domestic equity markets surged on Friday, with the Nifty 50 closing just below 23,300. The RBI`s upgrade of India`s GDP growth forecast to 7.2% for FY25, combined with the assurance of a stable Modi-led coalition government, ignited a rally across sectors. Even the previously underperforming IT stocks caught fire, spurred on by their appealing valuations.

The barometer index, the S&P BSE Sensex was surged 1,618.85 points or 2.16% to 76,693.36. The Nifty 50 index jumped 468.75 points or 2.05% to 23,290.15.

The Sensex hit a record high of 76,795.31 today, supported by rally in Mahindra & Mahindra (+5.83%), Infosys (+4.13%) and Reliance Industries (+2.64%).

In the broader market, the S&P BSE Mid-Cap index rallied 1.28% and the S&P BSE Small-Cap index jumped 2.18%.

The market breadth was strong. On the BSE, 2,890 shares rose and 970 shares fell. A total of 92 shares were unchanged.

Politics:

India`s Narendra Modi was elected by National Democratic Alliance (NDA) lawmakers on Friday for a historic third consecutive term as prime minister. He will meet President Droupadi Murmu to present his claim to form a new government, with his swearing-in set for Sunday (9th June) evening. For the first time in a decade, Modi`s BJP needed support from regional parties, securing only 240 seats in the lower house, short of the 272 needed for a majority. The NDA won 293 seats in the 543-member Lok Sabha, while the opposition INDIA alliance, led by Rahul Gandhi`s Congress party, exceeded forecasts with over 230 seats.

RBI Monetary Policy Outcome:

The Reserve Bank of India (RBI) monetary policy committee (MPC) has voted to keep the repo rate unchanged at 6.5%. Consequently, the standing deposit facility (SDF) rate remains unchanged at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%.

The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.

The projected real GDP growth for 2024-25 has been revised upward to 7.2%. The quarterly breakdown is as follows: Q1 at 7.3%, Q2 at 7.2%, Q3 at 7.3%, and Q4 at 7.2%. This represents a slight improvement from the previous estimate, where the GDP growth was projected at 7%, with Q1 at 7.1%, Q2 at 6.9%, Q3 at 7%, and Q4 also at 7%. The risks associated with this projection are considered evenly balanced.

The projected CPI inflation for 2024-25 remains unchanged at 4.5%. The quarterly breakdown is as follows: Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6%, and Q4 at 4.5%. This is consistent with the previous meeting`s projection.

The minutes of the MPC�s meeting will be published on 21 June 2024. The next meeting of the MPC is scheduled during August 6 to 8, 2024.

Numbers to Track:

The yield on India`s 10-year benchmark federal rose 0.04% to 7.018 as compared with previous close 7.015.

In the foreign exchange market, the rupee is edged higher against the dollar. The partially convertible rupee was hovering at 83.41, compared with its close of 83.53 during the previous trading session.

MCX Gold futures for 5 August 2024 settlements slipped 1.53% to Rs 72,014.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was down 0.01% to 104.09.

The United States 10-year bond grew by 0.42% to 4.296.

In the commodities market, Brent crude for Aug 2024 settlement lost 31 cents or 0.39% to $80.18 a barrel.

Global Markets:

European market declined while Asian stocks ended mixed on Friday as traders refrained from big bets ahead of the US nonfarm payrolls report.

The US nonfarm payrolls report, a crucial indicator of the health of the American economy, will be released later today. Investors are watching this data closely to gauge its impact on global markets.

Meanwhile, China`s exports in May grew faster than expected, while imports missed forecasts, customs data showed Friday. Exports rose by 7.6% in May from a year a go in U.S. dollar terms. Imports, however, rose by 1.8% during that time.

In the US, the S&P 500 and Nasdaq closed slightly lower on Thursday, giving back some of their gains from the previous session`s record highs. This came ahead of a key labor market report due Friday. Technology stocks, particularly Nvidia, led the decline.

Stocks in Spotlight:

The Nifty IT index surged 3.37% to 35,169.90. Wipro (up 5.09%), Tech Mahindra (up 4.18%), Infosys (up 4.13%), Persistent Systems (up 4.11%), Coforge (up 3.82%), LTIMindtree (up 3.54%), L&T Technology Services (up 2.55%), HCL Technologies (up 2.22%), TCS (up 1.52%) and Mphasis (up 1.29%) soared.

Wipro soared after the bagging a $500-million order from a leading US communication service provider.

Mastek rallied 8.18% after the company�s cloud-native platform, icxPro platform partnered with NVIDIA AI Enterprise to boost CX (Customer Experience) management for different sectors.

Adani Ports and Special Economic Zone (APSEZ) rose 1.93% after the company has received letter of intent (LoI) from Syama Prasad Mookerjee Port Authority, Kolkata (SMPK) for operation and maintenance of container terminal at Kolkata.

Bajaj Finance jumped 3.86% after the NBFC�s board approved the offer for sale (OFS) of equity shares of a wholly owned subsidiary, Bajaj Housing Finance (BHFL), aggregating to Rs 3,000 crore through initial public offer (IPO).

Tata Chemicals shed 0.65%. The Chester Crown Court, United Kingdom (UK), ordered a fine of GBP 11,00,000 on Tata Chemicals Europe, company�s subsidiary in UK, for safety incident which occurred in 2016.

Dixon Technologies (India) gained 2.30% after the company entered into a term sheet with HKC Corporation to form a joint venture (JV), subject to receipt of necessary statutory approvals and signing of definitive agreements.

Rail Vikas Nigam (RVNL) advanced 1.52% after the civil construction firm received letter of award (LoA) from National Thermal Power Corporation (NTPC) for Rs 495.14 crore.

RITES rose 0.36%. The company said that it has received a letter of award (LoA) from Tata Steel for Loco Hiring along with operation and maintenance.

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