In Tuesday’s trading session, the domestic benchmark indices in India experienced significant gains as investors displayed a heightened appetite for risk, leading to buying across various sectors. The positive sentiment was supported by the country’s cooling inflation and recent economic growth, as indicated by the latest macroeconomic data.
The Sensex, India’s key stock market index, concluded the day with a healthy gain of 418 points, or 0.67%, reaching a level of 63,143.16. Similarly, the Nifty 50, another prominent index, closed at 18,716.15, up 115 points, or 0.62%.
Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd, commented on the market performance, attributing the positive sentiment to lower inflation and upbeat Index of Industrial Production (IIP) data in the domestic market. Additionally, global cues were supportive, with expectations of the Federal Reserve pausing its monetary tightening measures and China unveiling stimulus measures.
The trading day began with the Nifty opening higher and gaining momentum throughout the session, eventually closing near its daily high at around 18,720 levels, marking a 0.6% increase with a gain of 119 points. Moreover, both the Nifty Midcap100 and Nifty Smallcap100 also witnessed gains, closing higher by 1.2% and 0.7%, respectively.
Khemka highlighted the sector-wise performance, noting that, excluding the auto sector, all other sectors ended the day in the green. The real estate sector emerged as the biggest gainer, rising by 3%, followed by FMCG (Fast Moving Consumer Goods) and Pharma sectors. The cooling off of retail inflation to a 25-month low of 4.2% in May positively impacted FMCG stocks, while the Reserve Bank of India’s decision to maintain interest rates unchanged and China’s rate cut contributed to the rally in realty stocks.
Looking ahead, market participants eagerly awaited the release of the U.S. Consumer Price Index (CPI) inflation data later in the day, as it would set the tone for the outcome of the Federal Open Market Committee (FOMC) meeting scheduled for the following day. The outcome of the meeting was anticipated to have a significant impact on market movements. Khemka mentioned that the Nifty was finding support at lower levels, indicating a positive overall setup. He further expressed expectations for the market momentum to continue, with stock-specific actions likely to drive movements in mid-cap stocks.
Overall, the trading session on Tuesday reflected a favorable market sentiment in India, with the benchmark indices witnessing substantial gains. The positive outlook was supported by lower inflation figures, upbeat IIP data, and positive global cues. Investors remained focused on the upcoming U.S. CPI inflation data and the subsequent FOMC meeting, which were expected to provide further direction to the market.
