Continuing their record run for the second consecutive session, both benchmark indices, Nifty 50 and Sensex, have achieved new milestones today. The Nifty 50 has crossed 25,200 for the first time to hit a fresh peak of 25,258 points and in the last 11 sessions, the index finished in green, which marks the longest winning streak in about 17 years. During this period the index has jumped from ₹24,139 points to 25,151 points, resulting in a gain of 4.17%.
The Sensex also reached a new all-time high of 82,637 points during today’s session, surpassing the 82,500 mark for the first time. Following a rocky start to August and a period of stagnation in the first half of the month, the indices have surged, gaining up to 1% so far. This marks their third consecutive month of bullish momentum.
Sectorally, the Nifty Pharma index surged by 1%, while the Nifty PSU Bank gained 0.9%. The Nifty Healthcare rallied 0.81%, and the Nifty Realty rose by 0.72%. Among individual stocks in the Nifty 50 index, Divi's Laboratories, Bharti Airtel, BPCL, Bajaj Finserv, and HCL Technologies all achieved new 52-week highs in today’s session.
The following are some of the key factors contributing to today's stock market rally.
The U.S. economy grew more robustly in the second quarter than previously reported, thanks to an upward revision in consumer spending. Gross Domestic Product (GDP) increased at an annualized rate of 3% during the April-June period, up from the earlier estimate of 2.8%. Personal spending, a key driver of economic growth, rose by 2.9%, surpassing the previous estimate of 2.3%.
Initial jobless claims in the U.S. decreased slightly to 231,000 from the previous week’s 232,000, although this was marginally above the anticipated 230,000.
Last week, Fed Chair Jerome Powell provided a strong indication that interest rates are likely to be reduced in September. During his speech at the Jackson Hole Economic Symposium, Powell suggested that the central bank is poised to cut rates at its September meeting.
Powell noted that the Federal Open Market Committee (FOMC) is increasingly confident that inflation is moving toward the central bank’s 2% target, which supports the need for a less restrictive monetary policy.
Earlier, the minutes from the Fed's July meeting hinted at a probable rate cut, with most committee members agreeing that it would be "appropriate" to lower rates in September if the data continued to meet expectations.
Analysts generally expect the Fed to implement a cautious quarter-point rate cut in September. However, a larger half-point cut could be considered depending on forthcoming economic data.
Market participants now await U.S. core personal consumption expenditures data, the Fed's preferred gauge of inflation, on Friday to confirm bets of the September rate cut.
In August, domestic institutional investors (DIIs) purchased shares worth $6.14 billion on a net basis, about twice the net outflows experienced by foreign portfolio investors (FPIs), according to media reports.
Experts attribute this trend to FPIs selling stocks in the secondary market due to high valuations, while they continue to invest in the primary market where valuations are more attractive.
In contrast, robust participation from retail investors, especially through the Systematic Investment Plan (SIP) route, has led to a notable increase in DII ownership. A recent analysis by DAM Capital revealed that DIIs' ownership of Nifty 500 companies reached a record high of 16.9% for the quarter ending in June. Meanwhile, FPI ownership has declined to 18.8%, marking its lowest level in nearly 12 years.
The strength of the US economy is contributing to a significant drop in the dollar's value. The US Dollar Index is on track for its largest monthly decline this year, as strong economic growth has lessened the appeal of the dollar as a safe-haven currency.
So far this month, the dollar index has fallen by 2.56%, marking its steepest monthly drop since December 2023.
"The Nifty 50 index has crucial support at 24,900, whereas the 50-stock index is facing a hurdle at 25,500. However, the index is looking positive on the chart pattern, and it may touch 25,700 after breaching this hurdle," said Sumeet Bagadia, Executive Director at Choice Broking.
"Likewise, the BSE Sensex has made a strong base at 82,000. The frontline index is facing resistance at the 83,000 mark. On breaching this resistance, the 30-stock index may touch 83,500 in the near term," 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.
