Benchmark indices on Monday scaled fresh peaks in a rally led by IT shares as investors bet on a turnaround in the sector amid growing expectations of an interest rate cut by the US Federal Reserve and the European Central Bank by September.
While the Sensex jumped 443.46 points to close at an all-time high of 79476.19, the Nifty advanced 131.35 points to finish at 24141.95. With the broader market staying in the green, the investor wealth of BSE-listed firms hit a lifetime high of ₹443.05 trillion.
“The domestic market sustained its upward momentum, with a reduction in US PCE inflation raising hopes for a rate cut by the US Fed in September. This optimism contributed to the strong performance of IT stocks,” said Vinod Nair, head of research, Geojit Financial Services.
A Morgan Stanley strategist told CNBC the investment bank expects dual rate cuts over the next couple of months. Andrew Sheets, managing director and head of cross-asset strategy, told Squawk Box Europe that the US Fed and the ECB will both cut rates in September.
Market circles added that positive domestic economic data and optimism over the upcoming budget contributed to the bullish trend.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) increased to 58.3 in June from 57.5 in May, indicating a sharper improvement in business conditions.
Though the shares of Reliance Industries settled with losses of 0.37 per cent, its market capitalisation was above the ₹21 lakh crore mark.
“The consistent buying interest on dips suggests bullish control, likely continuing the current tone. The renewed strength in midcap and smallcap segments adds further positivity,” said Ajit Mishra SVP, Research, Religare Broking Ltd.
In the broader market, the BSE smallcap and midcap indices raced to record high levels. Smallcap gauge jumped 1.58 per cent and the midcap index climbed 1.11 per cent.
Meanwhile, Nuvama Institutional Equities said in a note that the August review of the MSCI Standard Index could see the inclusion of six stocks — Vodafone Idea, Prestige Estates, Oberoi Realty, Schaeffler India, Dixon Technologies (India) Ltd and Uno Minda.
It felt that the review could see cumulative inflows worth $1.18 billion after the changes take place.
“We are reiterating the MSCI August 2024 contenders. India’s weight in MSCI EM now stands at 19.2 per cent, and we should gradually cross the 20 per cent mark’’, it added.
In Asian markets, Seoul, Tokyo and Shanghai settled higher. European markets were trading with gains. US markets ended lower on Friday.
Global oil benchmark Brent crude climbed 0.51 per cent to $85.43 a barrel.
Meanwhile, Niva Bupa Health Insurance, formerly Max Bupa Health Insurance Company, has filed preliminary papers with Sebi to raise ₹3,000 crore through an initial public offering.
The proposed IPO is a combination of fresh issuance of equity shares worth ₹800 crore and an offer for sale of up to ₹2,200 crore by a promoter and an investor shareholder, according to the draft red herring prospectus (DRHP).
