Strong buying fuels momentum over Dalal Street

The strong buying fuelled the momentum over the Dalal Street, with both Sensex and Nifty reaching fresh record closing highs, following U.S. economic data that eased growth concerns. Setting the stage for a strong trading session, indices marked fresh highs at the opening, driven by positive global trends and Moody's decision to raise India's 2024 GDP growth forecast to 7.2% from 6.8 per cent previously citing signs of improving rural demand. Also, growth for 2025 is pegged at 6.6 per cent versus 6.4 per cent. Besides, Fitch affirmed India's long-term foreign currency issuer rating at 'BBB-' with a stable outlook, citing a strong medium-term growth outlook.

While market participants were eyeing India’s gross domestic product (GDP) and infrastructure output data to be released later in the day, indices were seen holding their ground in positive territory during the whole day. Domestic sentiments remained optimistic, as the retail inflation rates for farm and rural workers eased in the month of July, with the All-India Consumer Price Index for Agricultural Labourers (CPI-AL) and Rural Labourers (CPI-RL) falling to 6.17% and 6.20%, as compared to 7.43% and 7.26% in July 2023, respectively. The corresponding figures for June 2024 were 7.02% for CPI-AL and 7.04% for CPI-RL.

On the global front, European markets were trading higher, after Eurozone inflation softened to the lowest since mid-2021 in August on a fall in energy prices, adding chances of another interest rate cut by the European Central Bank. The harmonized index of consumer prices rose 2.2 percent on a yearly basis in August, slower than July's 2.6 percent increase. This was the lowest since July 2021 and also matched expectations. Asian markets settled higher on Friday, after industrial production in Japan was up a seasonally adjusted 2.8 percent on month in July. That was shy of expectations for an increase of 3.6 percent following the 4.2 percent contraction in June. 

Back home, sugar stocks buzzed as the government removed the cap on sugar diversion for ethanol production for ESY (Ethanol Supply Year - December to November) 2024-25. According to the government's notification, sugar mills and distilleries can produce ethanol from sugarcane juice/sugar syrup, B-Heavy molasses, as well as C-Heavy molasses, during ESY2024-25 as per their agreements with oil marketing companies. Tyre stocks also caught speed after industry body Automotive Tyre Manufacturers Association (ATMA) said that tyre exports from India grew 17 per cent year-on-year to reach Rs 6,219 crore in the first quarter of the current fiscal (Q1FY25) with the US emerging as the biggest market.

Finally, the BSE Sensex jumped 231.16 points or 0.28% to 82,365.77, and the CNX Nifty was up by 83.95 points or 0.33% to 25,235.90.     

The BSE Sensex touched high and low of 82,637.03 and 82,256.02 respectively. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.53%, while Small cap index was up by 0.75%.

The top gaining sectoral indices on the BSE were Realty up by 1.88%, Healthcare up by 1.41%, Utilities up by 0.77%, Basic Materials up by 0.70% and Telecom up by 0.67%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Bajaj Finance up by 2.03%, Mahindra & Mahindra up by 1.75%, NTPC up by 1.56%, Bajaj Finserv up by 1.55% and Bharti Airtel up by 1.46%. On the flip side, Tata Motors down by 0.92%, Reliance Industries down by 0.69%, Tech Mahindra down by 0.67%, ITC down by 0.61% and HDFC Bank down by 0.34% were the top losers.

Meanwhile, amidst strong growth outlook and fiscal credibility, the global rating agency Fitch Ratings has retained India’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-’ with a stable outlook. The ‘BBB’ rating reflects low default risk expectations, where the capacity to meet financial commitments remains adequate despite potential vulnerabilities from adverse business or economic conditions.

According to the rating agency, India is set to remain among the fastest-growing sovereigns globally with GDP growth of 7.2 per cent in the current fiscal year and 6.5 per cent in FY26, down from 8.2 per cent in FY24. It further noted that strengthening fiscal credibility from the recent achievement of deficit targets, enhanced transparency and buoyant revenues, have increased the likelihood that government debt can follow a modest downward trend in the medium term.

However, it flagged debt and debt service burden of India, compared to other ‘BBB’-rated peers. As per the agency, lagging structural metrics, including governance indicators and GDP per capita, also weigh on the rating. Fitch said public infrastructure capex remains a key growth driver and has improved spending quality, helping mitigate the drag from fiscal consolidation.

The CNX Nifty traded in a range of 25,199.40 and 25,268.35. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.23%, Bajaj Finance up by 2.07%, Mahindra & Mahindra up by 1.97%, Divi's Lab up by 1.84% and NTPC up by 1.78%. On the flip side, Tata Motors down by 1.13%, HDFC Bank down by 0.78%, Tech Mahindra down by 0.72%, Coal India down by 0.68%  and Reliance Industries down by 0.56%, were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 28.31 points or 0.34% to 8,407.95, France’s CAC rose 36.69 points or 0.48% to 7,677.64 and Germany’s DAX gained 41.13 points or 0.22% to 18,953.70

Asian markets settled higher on Friday after positive US labour market and GDP data. Meanwhile, investors were awaiting the release of Federal Reserve's preferred inflation metric due later in the day for clues on the Fed's rate trajectory. Japanese shares gained as a weaker yen lifted Japanese export-related shares and after data showed Tokyo's core inflation continued to climb in August, comfortably surpassing the central bank’s 2% target. Seoul shares advanced despite an underwhelming result by AI chipmaker Nvidia. Data showed that industrial production in South Korea falling more than expected in July, driven by a contraction in semiconductor and automobile production.