Nifty 50 maintains upward trend for the sixth consecutive week, gains nearly 9%

In recent sessions, the Indian market struggled to sustain its bull run until TCS's results provided a much-needed catalyst, setting a positive tone for the earnings season. Additionally, expectations of a Fed rate cut have further fueled the rally.

The healthy numbers by the TCS for the June ending quarter have sparked optimism among investors about potential sectoral recovery.

The notable improvement in revenue from TCS's BFSI vertical particularly fueled a rally in mid and small-cap IT stocks, as these companies derive a significant portion of their revenue from this space.

Investors are hopeful that this trend signifies a broader sectoral rebound and positive growth outlook going forward. As a result, the Nifty 50 finished ended Friday's session with a gain of 0.77% at 24,502 points. The index also touched a fresh record high of 24,592 points during the trade. 

The index saw significant contributions today from TCS, boosting the index by 59 points, or 32%, to its 186.20-point rally. Other major contributors included Infosys and Reliance Industries, collectively contributing 37.60% to the overall rally.

The index concluded last week with a gain of 0.73%, extending its winning streak for the sixth consecutive week, marking the longest weekly gain this year so far. During this period, the index has gained nearly 9% and it has rallied 12.75% in CY24 so far. 

Biggest intraday rally

Meanwhile, the Nifty IT index closed Friday's session at 39,023, up 4.51%, crossing the 39,000 mark for the first time since January 2022. This also marks the biggest intraday rally for the index since December 2023, coming close to its record high of 39,446, falling short by just 209 points.

All 10 constituents of the index closed with gains, led by Coforge, which rose 7.4%, followed by TCS and Mphasis, with gains of 6.6% and 4.2%, respectively.

Other notable gainers included LTIMindtree, L&T Technology Services, HCL Technologies, and Infosys, all trading up between 3% and 4.5%. Wipro, Tech Mahindra, and Persistent Systems achieved new 52-week highs, with Wipro hitting ₹564.90, Tech Mahindra reaching ₹1,511, and Persistent Systems at ₹4,928 apiece.

On the other hand, market expectations have risen on prospects of a Federal Reserve interest rate cut by September and December. This follows Thursday's release of the US annual inflation rate, which dropped for the third consecutive month to 3% in June 2024, the lowest since June 2023, down from May's 3.3% and below the forecasted 3.1%.

Traders now anticipate a 93% chance of a rate cut in September, up from 73% on Wednesday.

Vinod Nair, Head of Research at Geojit Financial Services, said, "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," he added.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.