Markets rally across all sectors, Eyes on India's CPI data

The Indian benchmark indices Sensex and Nifty soared by over 1.5% during the final hours of trading session on Thursday, reaching new all-time highs of 83,116 and 25,433, respectively. The rally was supported by robust global cues, with all sectors trading in the green, and auto, metal, and energy stocks contributing significantly to the gains.At close, the Sensex was up 1,439.55 points or 1.77 percent at 82,962.71, and the Nifty was up 470.45 points or 1.89 percent at 25,388.90. The market breadth steered towards gainers as around 2,228 shares advanced, 1,564 shares declined, and 103 shares were unchanged.
The market's optimism was largely driven by the latest U.S. inflation data, which fell to a three-year low of 2.5% in August. This development has bolstered expectations that the Federal Reserve may initiate its rate-cutting cycle next week. According to the CME FedWatch tool, swap markets are now pricing in an 85% likelihood of a 25 basis point rate cut in the upcoming September 18 meeting, up from 60% just a week ago.
Meanwhile, following the release of the US CPI data on September 11, investors are now eyeing India's August CPI report, which is expected later today after market hours. On the sectoral front, Nifty Metal index was the top performer of the day led by gains in Hindalco, Bharti Airtel and NTPC leading the gains, followed by Nalco, NMDC, and Vedanta.Besides,all sectoral indices also posted gains. Metals, automobiles, capital goods, technology and power sectors surged 2-4 percent. According to a Bloomberg report, China was looking to cut interest rates on more than $5 trillion of outstanding mortgages this month.
Rupee Close:
On 12 Sep'24,the Indian rupee traded in a narrow range to settle 4 paise higher at 83.95 against the U.S. dollar on Thursday amid a positive trend in domestic equities and foreign fund inflows.Forex traders reportedly stated the rupee trade was range-bound, with a slight positive bias toward positive domestic equities. However, a rebound in the U.S. Dollar and a surge in crude oil prices capped sharp gains.
Trading Guide:
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the latest US inflation numbers are mildly positive for markets. "This paves the way for a rate cut by the Fed in September. But since core inflation continues to remain high at 3.2 percent the Fed is likely to be cautious and refrain from a 50 bp rate cut, finally settling for a 25 bp rate cut."He expects CPI inflation in India to be low at around 3.5 percent in August. "This can facilitate a rate cut by the MPC in 2024 itself. In brief, the benign inflation conditions and prospects for rate cuts are positives for stock markets," he reportedly quoted as saying.
Market experts have recommended five shares to buy- Jindal Steel, Britannia Industries, Zomato, Deepak Nitrite, and JK Lakshmi Cement.

(Writer is a Finance Research Analyst, based in Gandhinagar, Gujarat)