The stock market rally has come on the back of a dovish stance by the US Federal Reserve, which has signalled around three rate cuts in the coming years.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.
Among the Sensex constituents, HCL Tech, TCS, and Infosys witnessed notable gains, rising by 5-6%. SBI, Tata Steel, Tech Mahindra, NTPC, and Wipro also ended the day on a positive note. However, Nestle, Bharti Airtel, Maruti, and ITC closed in negative territory. The upsurge in IT stocks follows the US Federal Reserve’s acknowledgment of significant progress in addressing inflation while maintaining a hold on interest rates.
Sector-wise, Nifty IT surged by 4.5%, leading the charge. Nifty Metal and Nifty PSU Bank also saw a notable rise of over 2%. Conversely, Nifty Auto, FMCG, Media, and Realty experienced declines.
According to an ET report, Foreign Institutional Investors (FIIs) have been pouring in an average of over Rs 3,900 crore per day in December. Data from NSDL reveals that FIIs invested a staggering Rs 39,260 crore in the first ten days of December. With the recent announcement by the US Federal Reserve hinting at three rate cuts in 2024, experts predict a potential flood of foreign investment in Indian stocks in the coming year.
This surge in FII flows follows a Rs 9,000 crore inflow in November, which followed several months of consistent selling in September and October.
Pankaj Pandey, Head of Research at ICICIdirect, commented that despite the lack of significant FII inflows, the market has reached new highs. With the change in the Fed’s outlook, Pandey expects a substantial amount of money to chase a few promising stocks. It is advisable to remain invested in the market as better days lie ahead, he says.
Amit Sachdeva of HSBC Securities expressed optimism, stating that HSBC Securities is very bullish on the Indian market. India is a key overweight market for HSBC, and we continue to have a positive outlook, he was quoted as saying.
Apart from the US Federal Reserve’s actions, the sharp decline in the US 10-year bond yield to 3.95% has also triggered substantial capital flows towards emerging markets like India.