India’s stock exchanges witnessed a bullish trend at the start of the week with key indices, the Sensex and Nifty, soaring to record levels driven by strong quarterly performance forecasts and a ripple effect from gains in Asian markets on Monday, April 8.
The BSE Sensex began the trading day by opening at an unprecedented high of 74,555.44, marking an increase of 307 points, or 0.41 percent. The momentum carried on through the morning, with the Sensex reaching an even higher peak at 74,658.95. Similarly, the NSE Nifty opened at an impressive figure of 22,578.35, climbing from its previous close of 22,513.7 and proceeding to hit a brand new all-time high of 22,623.9 during the morning session, surpassing its previous record intraday peak of 22,619 established on April 4.
Market experts expressed a sentiment of optimism regarding the surge. According to Prashanth Tapse, Senior VP of Research at Mehta Equities Ltd., investor confidence on Dalal Street is bolstered by the prospect of impressive fourth-quarter earnings for the fiscal year 2024 in India. This confidence outshines any concerns about the U.S. Federal Reserve’s plans to cut interest rates. All eyes are particularly on Tata Consultancy Services (TCS) as it leads the Q4 earning season that commences on April 12, with the Nifty sustaining its robust performance, hovering around 22,121.
HDFC Securities in its recent analysis anticipates that the information technology (IT) sector is poised to overcome its period of sluggish growth by the fourth quarter of FY24 and start a gradual recovery in FY25. Predictions for this quarter show a mixed bag of outcomes for tier-1 IT companies with growth rates varying from a 1.3 percent decrease to a 1.3 percent increase quarter over quarter, which represents a broader range from -7 percent to +6 percent on a year-over-year basis. Mid-tier IT firms, on the other hand, are expected to see growth rates between 0.3 percent and 4.2 percent quarter over quarter.
Among the top tier-1 IT contenders, TCS is anticipated to report the strongest growth at 1.3 percent sequentially, followed by Infosys and HCL Technologies with flat growth and a projected decline for Wipro, Tech Mahindra, and LTIMindtree.
V K Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, highlighted various expected outcomes in the sector-wise performance: while IT company results may be mild, the financial sector, driven by giants such as HDFC Bank and ICICI Bank, may exhibit positive results, potentially lifting the Bank Nifty higher. He also noted that small finance banks are performing particularly well, and sectors like capital goods and autos are displaying robust strength. However, the FMCG sector appears weak due to poor volume growth.
Vijayakumar further underscored the rapid shifts in macroeconomic expectations. The year had begun with an anticipation of seven rate cuts by the US Federal Reserve in 2024, which then adjusted to three, with the current belief being that there may be only two cuts. Despite these changes in outlook, he remarked on the unexpected resilience of the US economy and labor market, which have taken the majority of experts by surprise.
Even as anticipation for rate cuts sheds weight, the primary market in the US persists in performing well, establishing new milestones. This buoyancy is likely to provide a supportive backdrop for equity markets globally, including India.
The Indian market’s opening high came despite the Reserve Bank of India (RBI) holding steady on interest rates. In its latest monetary policy review, the RBI’s six-member Monetary Policy Committee (MPC) held the repo rate constant for the seventh time in a row at 6.5 percent, amidst concerns about food inflation pressures and the potential derailment of the disinflationary path.
Notable gainers amongst the NSE-listed companies on this trading day included Power Grid Corporation of India, Bharat Petroleum Corporation Ltd (BPCL), Reliance Industries, Mahindra & Mahindra Ltd, and Tata Steel, which led the rally, contributing to the new highs encountered by the markets.
