Indian Stock Indices Surge to Record High on Positive US Inflation Data and Strong TCS Results

Indian stock markets hit a fresh high, buoyed by easing US inflation, strong TCS results, and positive market fundamentals. Sensex surged over 600 points and Nifty climbed 186 points. Experts anticipate continued gains due to strong earnings outlook and potential rate cuts, amid mixed sectoral indices performance.

Indian stock indices surged higher as Friday's trading session advanced, reaching a new record. The boost was driven by the latest moderation in US inflation, stronger-than-expected TCS results, and overall positive market fundamentals. The Sensex closed up by over 600 points, or 0.8%, at 80,519 points, while the Nifty climbed 186 points, or 0.8%, closing at 24,502 points. Sectoral indices exhibited mixed performance.

The US consumer inflation unexpectedly fell in June, sparking hopes for an earlier-than-anticipated interest rate cut, possibly by September. So far in the 2024-25 fiscal year, Sensex and Nifty have posted returns of 11-13%. Robust buying from both foreign and domestic institutional investors has been a key support for the markets.

Vinod Nair, Head of Research at Geojit Financial Services, stated, "Multiple tailwinds led the market to come out of the range-bound trajectory. The strong result from the IT bellwether and a drop in US inflation to a one-year low added optimism to the market. The chances of a rate cut in September are inching higher, which is evident in the fall of the dollar index. We expect stock-specific moves to gain traction due to the ongoing earnings season and upcoming budget; indeed, IT will be in the limelight due to the good start to the earnings and outlook." Markets are now looking ahead to India's June retail inflation data, which is set to be released later today.

In May, India's retail inflation rate showed a slight decline, continuing its trend of moderation, though food prices remained a concern. The annual retail inflation in May was at a 12-month low of 4.75%, slightly down from 4.83% in April. Since December last year, when it stood at 5.7%, the Consumer Price Index has been gradually easing.

The retail inflation in India is within the RBI's comfort zone of 2-6%, though slightly above the ideal 4% mark. Inflation remains a global concern, but India has managed its inflation trajectory relatively well. Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd., noted, "We expect this momentum to continue supported by the expectation of healthy quarterly results, hope of a rate cut, and a pre-budget rally. The IT sector is expected to stay in focus as other IT majors release their results. On Monday, markets will react to India's inflation data, which will be released post-market. Key results next week include Jio Financials, HDFC Life, Asian Paints, LTI Mindtree, Infosys, Havells, Wipro, JSW Steel, and Paytm."

Looking ahead, market watchers will keenly observe the policy decisions of the new government. Finance Minister Nirmala Sitharaman, who retains her role, will present the full Budget for 2024-25 on July 23.