The domestic equity indices continued their bull run on Friday, with the Sensex zooming past the 71,000 mark for the first time, propelled by the prospects of interest rate cuts by the US Federal Reserve in the next year.
The Nifty also extended its rally to scale new highs, and ended above the 21,000-mark for the second consecutive day.
The BSE’s Sensex advanced 970 points, or 1.37 per cent, to close at a new high of 71,4823.75. In the last two trading sessions, the 30-share index has gained around 1,900 points, or 2.7 per cent.
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The NSE’s Nifty 50 rose 274 points, or 1.29 per cent, to settle at an all-time high of 21,456.65. The index has rallied 530.3 points, or 2.53 per cent in the last two sessions.
“The buoyancy continued in the market as investors were expecting the clouds over US economic growth to recede by H2 CY24 and that the economy would achieve a soft landing aided by normalization in monetary policy,” said Vinod Nair, Head of Research at Geojit Financial Services.
Also Read | Sensex surges past 70K to record high after US Fed pauses — and signals cuts
Investors expressed confidence that clouds over US economic growth would dissipate in H2CY24, anticipating a soft landing facilitated by normalization in monetary policy, he said.
The US Fed, which kept the key interest rate unchanged on Wednesday, foresees three rate cuts next year. The US central bank signalled that they expect to make three quarter-point cuts to their benchmark interest rate in 2024.
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The commentary from the US Federal Reserve resulted in the yield on the 10-year US bond falling to below 4 per cent.
“Equity markets are witnessing a Santa rally globally post the dovish outlook by US Fed and fall in dollar index. This along with strong FIIs buying and healthy macros, supported the positivity in Indian markets,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.
Sector wise it was a mixed bag with buying seen in IT, PSU bank, metals and oil & gas. The Nifty IT index rose 4.56 per cent, or 1,559 points, to end at 35,782.45 on Friday. Nifty Bank rose 411.25 points, or 0.86 per cent to close at 48,143.55.
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Cash market volumes stood sharply higher (second highest ever) as compared to recent averages. PSU bank stocks extended gains for the eleventh consecutive trading session. The combined market value of all BSE-listed companies surged by Rs 2.76 lakh crore on Friday, marking an overall increase of Rs 8.55 lakh crore for the week, reaching Rs 357.78 lakh crore, said Devarsh Vakil – Deputy Head Retail Research, HDFC Securities.
On Friday, the foreign portfolio investors (FPIs) net purchased Rs 9,239.42 crore of domestic equities. However, the domestic institutional investors (DIIs) net sold Rs 3,077.43 crore worth of equities, the BSE’s provisional data showed.
So far in the current month, FPIs have poured in Rs 42,733 crore into the domestic equity market, as against Rs 9,001 crore invested in November.