Indian markets maintained their winning streak for the third consecutive trading session on Thursday, tracking global peers. Key US CPI (consumer price index) numbers for December lifted hopes that the US Fed will cut rates sooner than previously thought.
These rate-cut expectations, coupled with strong earnings from major US financial institutions, including JPMorgan, Wells Fargo, Citibank, and Goldman Sachs, as well as the announcement of a ceasefire agreement between Israel and Hamas, have also supported the bulls in gaining control of the markets.
The broader market, on the other hand, continues to outperform the frontline indices, while the PSU banking stocks dominated the street in today's session. Additionally, better-than-expected numbers from HDFC Life Insurance Company in the third quarter have boosted sentiment in the sector, leading to a sharp rally in major life insurance stocks.
Amid these positive developments, the Nifty ended the session with a gain of 0.42% at 23,311, while the Sensex closed at 76,042, marking a 0.42% increase from the previous close.
The Nifty Smallcap 100 index rose by 1.67% to 17,643, while the Nifty Midcap 100 index concluded the day with a gain of 1.08%, closing at 54,483.
Core U.S. inflation increased by 0.2% in December, after rising 0.3% for four straight months. This marked the first step down in the rate in six months. From a year ago, it rose by 3.2%, still above the Fed’s 2% target. Despite the softening in inflation, Fed officials had earlier expressed concerns about Donald Trump’s economic policies, which they believe could influence inflation numbers.
Donald Trump’s economic policies, aimed at making American businesses more competitive on a global scale, have raised fears of a potential global trade war. His reinforcement of tariff plans, particularly targeting China, has heightened concerns about a possible spike in inflation.
Commenting on today's market performance, Vinod Nair of Geojit Financial Services said, “Benchmark indices continued to trade in the positive, albeit off highs, driven by positive investor sentiment following mild US inflation data, which raised hopes for a potential rate cut by the Federal Reserve.”
"Additionally, favourable developments in the Israel-Hamas ceasefire and a reduced trade deficit further boosted the market's upward movement. However, weak economic growth data from the UK dampened some of this optimism. Despite higher valuations compared to leading indices, the broader market saw bargain buying during the recent correction," Vinod Nair added.
Among sectoral performances, the Nifty PSU Bank emerged as the top gainer, with the index jumping 2.55% to reach 6,307 points. The rally in state-owned banks was driven by media reports that the government had approved a fundraising plan of ₹10,000 crore for five state-run lenders through the Qualified Institutional Placement (QIP) route.
All 10 constituents of the index ended the session in the green, with Punjab & Sind Bank leading the gainers, rallying 7%. This was followed by Indian Bank, Bank of India, Union Bank, Bank of Baroda, Canara Bank, Punjab National Bank, and Bank of Maharashtra, all gaining between 2% and 5%.
Other sectoral indices such as Nifty Metal, Nifty CPSE, Nifty Energy, Nifty Bank, and Nifty Infra all concluded today’s session with gains of over 1%.
On the downside, Nifty FMCG was the top laggard, tumbling 0.56%. Today marked the 5th consecutive day of decline for the index, resulting in a 2.75% drop so far this month.
Nifty IT, on the other hand, failed to maintain the strong rally it had seen in the previous sessions, ending the session with a decline of 0.34%. Nifty Pharma and Nifty Consumer Durables also declined by up to 0.30%.
All major sugar stocks gained notably in the session amid reports of a potential increase in ethanol prices. Dhampur Sugar Mills emerged as the top performer with a rally of 10.4%, followed by Rajshree Sugars & Chemicals, Dalmia Bharat Sugar, Dwarikesh Sugar Industries, Bajaj Hindusthan Sugar, Ugar Sugar Works, Shree Renuka Sugars, Piccadily Agro Industries, and Rana Sugars, all of which ended with gains between 5% and 10.3%.
According to media sources, the Union Cabinet is likely to approve a proposal to raise ethanol prices. The cost of ethanol made from B-heavy molasses is expected to rise, along with an anticipated increase in the price of ethanol derived from sugarcane juice.
Amid expectations that the government may allocate more funds to Indian Railways in the upcoming Union Budget, scheduled to be presented by Union Finance Minister Nirmala Sitharaman in Parliament on February 1, stocks in the sector have surged.
(By arrangement with livemint.com)
