In a triumphant display of resilience, Indian benchmark indices powered through the current week, extending their bullish run for the fifth consecutive week, representing the longest weekly advance in CY24 so far.
The recent indications of a potential rate cut by the US Federal Reserve, a rebound in FPI inflows, and a strong rally by private large-cap banking stocks have powered the Nifty 50 to extend its bullish streak.
Further, the resurgence in IT stocks has also supported the rally. As a culmination of these factors, the Nifty 50 ended this week with a gain of 1.30% at a record high of 24,323 points. The index ended the previous week with a gain of 2.17%.
This week, the index surged past the 24,400 level for the first time, setting a new all-time high at 24,401 points. Following a streak of 12 record highs in June, the index notched three new peaks in just five sessions of July, bringing the total record attempts to 41 in CY24.
Meanwhile, mid- and small-cap stocks maintained their bullish momentum, with the Nifty Midcap 100 index closing the week with a gain of 2.43%, reaching 57,089 points, while the Nifty Smallcap 100 index concluded with a robust rally of 3.40%.
Overall, 42 out of 50 constituents of the Nifty 50 closed the week in positive territory, led by strong performances in the IT sector. Infosys led the pack with a gain of 5.15%, followed by HCL Tech and Wipro, each ending the week with gains of 4%.
Brokerage firms have turned bullish on India's IT services sector, citing signs of stabilisation in revenue growth, an anticipated end to the EPS downgrade cycle, and potential revenue acceleration starting in FY 2026.
Nomura, a Japanese brokerage firm, upgraded Infosys to a 'Buy' from 'Neutral' and raised its target price to ₹1,800 from ₹1,400. Similarly, Wipro's rating was upgraded to 'Buy' from 'Reduce' with a revised target price of ₹600 from ₹410.
CLSA also joined in, upgrading Wipro to 'Outperform' from 'Underperform' and increasing its price target to ₹607 per share from ₹431.
In June, the IT sector ended a three-month bearish streak with an impressive 11.65% gain, marking its strongest monthly performance since August 2021. However, despite other sectors hitting fresh all-time highs in 2024, the Nifty IT index has not reached this milestone since January 2022, when it peaked at 39,446 points.
Private sector banks including ICICI Bank, Kotak Mahindra Bank, and Axis Bank also posted gains ranging from 2% to 3%. Additionally, stocks such as ONGC, Coal India, Tata Consumer Products, Sun Pharma, HUL, and Grasim ended the week with rallies of over 2%.
However, Titan Company was the top weekly loser with a decline of 4%, followed by HDFC Bank, which fell after reporting a sequential decline in deposit growth for the June quarter, leading to a 2% drop in its shares during the week.
Recent U.S. economic indicators point to a cooling economy, prompting expectations of a Federal Reserve rate cut in September. Data released on Wednesday revealed an increase in initial jobless claims and a rise in the number of people on unemployment rolls to a 2-1/2-year high by the end of June, signaling a gradual slowdown in the labor market.
In addition, softer economic data has contributed to the decline of the dollar index, which is now down for the fourth consecutive day on Friday and hitting a three-week low.
According to the CME FedWatch Tool, markets are currently pricing in a 74% probability of a Fed interest rate cut during its September meeting.
Federal Reserve officials at their June meeting indicated that inflation is moving in the right direction but not quickly enough to lower interest rates, according to minutes from the June 11–12 session.
Investors are now awaiting the U.S. non-farm payroll data to be released later today, which is anticipated to show some moderation in job growth.
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.
