The Nifty 50 on Friday marked its longest ever winning streak of 12 sessions, buoyed by robust domestic investor support and rising optimism over potential rate cuts by the US Federal Reserve and other major global central banks. The Sensex also mirrored this positive momentum, notching its ninth straight session of gains — the longest streak since September 2023.

Both equity benchmark indices surged to fresh lifetime highs, both on an intraday and closing basis. The Nifty 50 reached a new intraday peak of 25,268.4 before paring some gains to close at 25,235.9, an 84-point or 0.3 per cent rise. The Sensex ended the day at 82,366, climbing 231 points or 0.3 per cent.

Over the week, the Sensex advanced 1.6 per cent, while the Nifty 50 gained 1.7 per cent. This ensured the third consecutive month of gains for both indices, with the Sensex up 0.8 per cent and the Nifty 1.1 per cent in August (the 50-share index has appreciated by 4.5 per cent over the past 12 sessions).

Strong buying from domestic institutional investors (DIIs), who net purchased shares worth Rs 48,347 crore in August, powered the markets in August. Foreign portfolio investors (FPIs) were also net buyers, adding Rs 10,174 crore to their holdings.

On Friday alone, FPIs were net buyers of Rs 5,318 crore, while DIIs sold shares worth Rs 3,198 crore. The inflows from FPIs were attributed in part to the MSCI India Standard Index.

Investor sentiment was further bolstered by gains in other global markets, driven by growing confidence in rate cuts from central banks in developed economies. US macroeconomic data suggested that the Federal Reserve has successfully curtailed inflation without tipping the economy into a recession. The trajectory of future data is expected to support this outlook, with some market participants speculating that the Fed may implement a 50 basis point rate cut, followed by another similar reduction before year-end.

Inflation in the Euro area, too, has dropped to its lowest level since mid-2021, fuelling expectations of a rate cut by the European Central Bank in the coming weeks.

“Healthy MSCI inflows took the indices to new highs. We expect the market’s upward momentum to continue, with stock-specific action driving gains. Global macroeconomic data, expected next week, will continue to influence domestic equities. Sector-wise, the auto industry will remain in focus as OEMs release their monthly sales figures,” commented Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.

Market breadth was positive, with 2,157 stocks advancing and 1,784 declining on the BSE. Sugar stocks rallied after the government lifted restrictions on sugar mills, allowing them to use cane juice or syrup for ethanol production in November.

“The recent market uptrend is largely attributed to global stability and renewed foreign inflows. We expect this positive sentiment continuing, with the Nifty 50 targeting the 25,500 mark soon. The IT sector continues to exhibit strength, while other sectors are seeing selective participation. In this environment, traders should focus on stock selection, prioritising those with relatively stronger performance,” said Ajit Mishra, senior vice-president of research at Religare Broking.

First Published: Aug 30 2024 | 7:57 PM IST