Stock market today: BSE Sensex surges over 1,400 points, ends just shy of 83,000; Nifty50 above 25,350 as bulls charge in – top reasons

Stock market today: BSE Sensex and Nifty50, the Indian equity benchmark indices, skyrocketed to lifetime highs in a matter of a few minutes on Thursday. While the BSE Sensex crossed the 83,000 mark for the first time, Nifty50 too went above 25,400 in a first. BSE Sensex ended the day at 82,962.71, up 1,440 points or 1.77%. Nifty50 closed the day at 25,388.90, up 470 points or 1.89%.
BSE Sensex and Nifty50 surged over 1.5% to reach new all-time highs, mirroring gains in global markets.The likelihood of increased foreign inflows into Indian equities strengthened following the release of US inflation data, which raised the probability of a 25 basis point rate cut by the US Federal Reserve.
The market capitalization of all listed companies on the BSE increased by Rs 6.6 lakh crore, reaching Rs 467.36 lakh crore, according to an ET report.
Data showed a slight increase in US consumer prices in August, but underlying inflation exhibited some persistence. This development increased the chances of a 25-basis-point Fed rate cut on September 18 to 85% from 66%, while the likelihood of a larger 50-bps reduction decreased to 15% from 34%, according to CME FedWatch.
IT companies, which generate a significant portion of their revenue from the US, experienced a 1% increase. Moreover, the Nifty Bank, Auto, Financial Services, Healthcare, and Oil & Gas sectors all witnessed gains exceeding 1%.
Bharti Airtel, Reliance Industries, HDFC Bank, and Infosys collectively contributed nearly 500 points to the Sensex rally. Other significant contributors to the index’s gain included L&T, M&M, NTPC, ICICI Bank, and SBI.
Bharti Airtel shares experienced a surge of nearly 5% on Thursday, hitting their 52-week high of Rs 1,650.75 on the NSE. The stock played a role in propelling the BSE Sensex to its record high of 82,774.9. Over the past four trading sessions, the stock has remained undefeated, rallying by almost 7%.
According to Narendra Solanki, Head Fundamental Research – Investment Services, Anand Rathi Shares and Stock Brokers, this is a much needed sentiment boost for the markets.
“Indian markets opened in green on back of positive Asian markets buoyed by a tech-fueled rally on Wall Street overnight during the afternoon session markets further gained in strength and traded sharply higher as traders preferred to buy large cap stocks. The markets further gained strength on news of China cutting rates by 50 bps on $5 trillion mortgages as soon as this month to boost consumption came out ahead of a European Central Bank (ECB) policy meeting later in the day; providing much needed sentimental boost to the markets,” he said.

Why BSE Sensex, Nifty50 rallied today

Several key factors contributed to today’s rally, including rate cut optimism, a decline in oil prices below $72 per barrel, a global market rally lifting sentiment, a weaker dollar index, an increase in FII inflows, and the possibility of a rate cut in India.
US Consumer Prices and Rate Cut Expectations
The slight increase in US consumer prices in August, with core inflation rising by 0.28%, has led to a shift in market expectations regarding the Federal Reserve’s upcoming rate decision. Despite the increase surpassing the expected 0.2%, the chances of a 25-basis-point rate cut on September 18 have jumped to 85%, while the likelihood of a more aggressive 50-bps cut has dropped to 15%. Experts suggest that the Fed is likely to be cautious due to the persistently high core inflation at 3.2%, ultimately settling for a 25bp rate cut.
Oil Prices Decline
September has witnessed a significant drop in oil prices, with a decline of over 10% due to weak Chinese demand and concerns about global oversupply. This decline is positive for Indian equities, as India heavily relies on crude oil imports. Lower oil costs help ease inflationary pressures and improve corporate margins, contributing to the recent market rise in India.
Global Market Rally
Indian equities have rallied in sync with global markets, mirroring the uptrend seen in Asia and Europe. The tech rally on Wall Street, unexpected US core inflation data, and anticipation of another ECB rate cut have all contributed to the positive sentiment in global markets. The weakening of the dollar index below the 102 level has also made emerging market assets more attractive to foreign investors.
FII Inflows and Market Sentiment
Foreign institutional investors (FIIs) have been consistently buying equities since June, infusing nearly Rs 17,016 crore into domestic equities in September alone. This steady inflow has bolstered market sentiment and contributed to the positive momentum in the Indian market. The reversal of earlier outflows seen in April-May reflects the confidence of foreign investors in the resilience of India’s economy.
Possible Rate Cut in India and Its Impact
Analysts expect India’s consumer price index (CPI)-based inflation to ease to between 3.2% and 4% for August, continuing the trend of falling inflation observed in recent months. This benign inflation condition and the prospects for rate cuts by the Monetary Policy Committee (MPC) in 2024 are seen as positives for the Indian stock market.