Nifty 50, Sensex end at fresh record highs; what drove the Indian stock market today?- explained

Stock market today: Indian stock market benchmarks—the Sensex and the Nifty 50—rose nearly a per cent each to hit fresh all-time highs in intraday trade on Friday, July 12, on gains led by select IT and banking heavyweights.

Nifty 50 hit a fresh all-time high of 24,592.20, while the Sensex made a fresh peak of 80,893.51 during the session.

Nifty 50 jumped 186 points, or 0.77 per cent, to settle at a fresh closing high of 24,502.15. The Sensex also settled at its fresh closing high of 80,519.34 with a gain of 622 points, or 0.78 per cent.

The mid and smallcap segments of the market saw some selling as the BSE Midcap index ended 0.22 per cent lower while the Smallcap index declined 0.13 per cent.

The overall market capitalisation of the firms listed on the BSE rose to nearly ₹452.4 lakh crore from nearly ₹451.2 lakh crore in the previous session, making investors richer by nearly ₹1.2 lakh crore in a single session.

As many as 285 stocks, including Axis Bank, Federal Bank, Tech Mahindra, Wipro, Persistent Systems, ONGC and Zomato, hit their fresh 52-week highs in intraday trade on the BSE.

Why did the Indian stock market rise today?

Market sentiment received a boost from TCS's better-than-expected Q1 earnings, further enhanced by a slower-than-anticipated rise in the US Consumer Price Index (CPI) inflation.

TCS reported an 8.72 per cent YoY rise in its consolidated net profit to ₹12,040 crore for Q1FY25. Its revenue for the quarter grew 2.2 per cent QoQ in CC (constant currency), beating the estimates of 1.5 per cent QoQ growth.

Experts saw TCS's earnings as signals of green shoots in the IT sector. The stock closed with a healthy gain of 6.68 per cent at ₹4184.90 and stood at the top of the Sensex and the Nifty 50 index.

Several IT stock saw healthy gains on Friday. TCS (up 6.59 per cent), Wipro (up 4.66 per cent), HCL Tech (up 3.30 per cent), Infosys (up 3.25 per cent), Tech Mahindra (up 3.04 per cent) and LTIMindtree (up 2.93 per cent) ended as the six top gainer stocks in the Nifty 50 index.

The Nifty IT index hit its 52-week high of 39,237.70 and closed with a fat gain of 4.53 per cent at 39,023 with all 10 components in the green.

“Markets were encouraged by TCS Q1 results, which triggered a massive rally in other IT stocks and drove the Sensex close towards the 81,000 mark in early trades. However, profit-taking in realty and other sectoral stocks trimmed the gains as investors cut their positions amid stretched valuations after the recent spike,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.

Apart from the impressive start of Q1 earnings, a third straight month of fall in the US inflation further fuelled optimism that the beginning of the rate cut cycle is near.

The US consumer price index (CPI) dropped 0.1 per cent month-on-month in June against the expectations of a 0.1 per cent rise. Year-on-year, the CPI rose 3 per cent compared to 3.3 per cent in May.

Fed Chair Jerome Powell, in his testimony this week, said the US economy was no longer overheated and highlighted the risk of keeping interest rates high for a longer period. Hopes are rife that the US central bank may cut rates in its September meet.

"Multiple tailwinds led the market to come out of the rangebound 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, evident in the fall of the dollar index," said Vinod Nair, the head of research at Geojit Financial Services.

The near-term market outlook

Experts expect the market to continue reacting to quarterly earnings in the near term. However, the upcoming Budget and chatter around it will be the major triggers for the market.

"We expect stock-specific moves to gain traction due to the ongoing earnings season and upcoming Budget. IT stocks will be in the limelight due to the good start to the earnings and outlook," said Nair.

Ajit Mishra, the SVP of research at Religare Broking, underscored that the rotational buying across heavyweights is helping the Nifty 50 maintain its positive momentum. Still, sustained levels above 24,500 are needed to reach the new milestone of 25,000.

"We recommend traders continue with a 'buy on dips' approach, focusing on stock selection and trade management. Besides domestic factors, participants should closely monitor global indices, especially the US markets, for cues," said Mishra.

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