NEW DELHI: On the back of strong global cues, the Indian equity market rallied sharply on Friday with the benchmarks – BSE Sensex and NSE Nifty50 – surging nearly 2% each. The Sensex added 1330.96 points, or 1.68%, to close at 80,436.84, while the Nifty50 advanced 397.40 points, or 1.65% to settle at 24,541.15.
In the broader market, BSE MidCap and SmallCap indices surged over 1.5% each. Investors added Rs 7.30 lakh crore on Friday as the market cap of BSE-listed firms rose to Rs 451.6 lakh crore. The rally was attributed to fresh hopes of an interest rate by the US Federal Reserve after consumer inflation in the economy fell to a 3-year low of 2.9% in July and retail sales grew stronger-than-expected in the same month. Domestically, the Indian CPI inflation rate also fell below the estimate, signalling optimism.
Tech-heavy NASDAQ advanced 2.5% on Thursday. US benchmarks - Dow Jones and the S&P 500 - gained about 1.5% each. Stability in Yen prompted a rally in Asian markets. Japan’s Nikkei rose 3.6%, Kospi and Taiwan were up 2% each.
“Stability of Japanese Yen has been instrumental in driving a global market recovery. Strong US retail sales and a fall in weekly jobless claims have helped alleviate fears of a US recession. Further, the market sentiment has improved due to a decrease in US CPI inflation. On the backdrop of these, the Indian IT firms exhibited strong buying interest,” said Vinod Nair, head of research, Geojit Financial Services.
Nair said challenges such as a drop in WPI inflation, weak IIP, and lukewarm Q1 corporate earnings suggest market gains may be limited, which is reflected by FIIs maintaining a net seller position. In the coming week, market will keenly watch Fed chair speech in Jackson Hole and FOMC minutes.
The major beneficiaries of an improving US economy were IT shares. The Nifty IT index rallied 3% on Friday with top gainers being Mphasis, L&T Technology Services, Wipro and Tech Mahindra. The heavyweights – Infosys and TCS – gained 2% and 3% each.