Stock Market India: Sensex gains over 240 points to close at a record high

The Sensex index rose to close at a record high on Tuesday, taking cues from a global stocks rally on hopes the Federal Reserve moves away from its ultra-aggressive policy stance and easing domestic inflation helped sentiment further.

The 30-share BSE Sensex index gained 248.84 points, or 0.4 per cent, to end at a record high of 61,872.99, and the broader NSE Nifty-50 index gained 74.25 points, or 0.41 per cent, to close at 18,403.40.

“Markets gathered bullish momentum towards the closing stages after exhibiting a range-bound trend for most of the trading session. ‘Cooling Inflation-Sparked Rally’ should ideally take Nifty to its all-time-high of 18605 mark and then aggressive targets at psychological 19000 mark,” said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.

On Monday, both benchmarks closed lower after see-sawing through most of the session between losses and gains as investors booked some profits, following a blistering rally on Friday. But Tuesday saw a record closing for the Sensex.

“The rally gathered pace towards the closing hours after trading range-bound for a major part of the trading session. The majority of the European and Asian indices logged gains, which had a rub-off effect on the local benchmarks,” said Shrikant Chouhan, Head of Equity Research for Retail at Kotak Securities.

Data released after market close on Monday showed retail inflation eased to a three-month low of 6.77 per cent in October, down from a five-month high of 7.41 per cent in September.

India’s central bank looks at retail inflation mainly to frame monetary policy. Any cooling in price pressures is a positive sign for the Reserve Bank of India, fighting elevated inflation and trying to stimulate the economy simultaneously. 

In addition, more than 1,000 businesses released their quarterly results on Monday as the nation’s month-long earnings season ended. According to Reuters, most reported profit increases and hinted brighter times ahead despite the global slump.

Global risk-taking has recently increased due to softer-than-expected US data, which many believe will allow the Fed to raise rates in increments of 50 basis points following three 75-basis-point hikes.

Vice Chair Lael Brainard, who stated on Monday that it would likely be “appropriate soon to switch to a slower rate of rises,” supported that point of view.

While US market futures indicated a recovery, the Stoxx 600 benchmark for Europe wobbled. Hong Kong’s Hang Seng benchmark increased by as high as 3.6 per cent in Asia. Treasury yields fell, the dollar fell, and the yen briefly fell due to an unexpected slowdown in Japan’s economy.

A day after Fed Governor Christopher Waller indicated the endpoint of the cycle was “far off,” Fed Vice Chair Lael Brainard stated that the US central bank will likely soon reduce its rate hikes but highlighted that they had “more work to do.”

“It’s certainly a time to be thinking about a recovery regime unfolding for markets,” Kristina Hooper, Chief Global Market Strategist at Invesco, said on Bloomberg Radio. “But it’s going to take a little time before we know if this really is something of a turning point for inflation, and the Fed can be a lot more comfortable about hastening the end of tightening.”

Meanwhile, Chinese Premier Xi Jinping and US President Joe Biden’s meeting on Monday raised optimism for improved relations between the two superpowers. Beijing had already promised efforts to ease Covid limits and boost China’s struggling real estate market.

One of the biggest growth drivers in the MSCI Asia Pacific Index was Chinese technology stocks. Taiwan Semiconductor Manufacturing Co. increased by as much as 9.4 per cent after Warren Buffett purchased a stake in the chipmaker for around $5 billion.