Indian IT stocks push domestic equities near record highs

What’s going on here?

Indian IT stocks gave a significant boost to domestic equities, approaching record highs after Fed chief Jerome Powell hinted at potential interest interest rate cuts.

What does this mean?

The IT index rose by 1.39%, taking advantage of the US revenue flows as Fed hints of rate cuts sparked market optimism. The NSE Nifty 50 rose 0.76% to 25,010.6, while the S&P BSE Sensex rose 0.75% to 81,698.11 – both indices are now just 0.5% below their all-time highs hit on August 1. Powell’s dovish comments, coupled with positive US economic data, inflation Data and low unemployment numbers have boosted global market sentiment and given a boost to Indian markets.

Why should I care?

For markets: Interest rate cues breathe life into stocks.

The possible Fed rate cuts are proving to be a boon for the markets, especially in the IT and metals sectors. The metals index rose 2.16%, driven by hopes of a weaker dollar and rising demand. Hindalco Industries led the way with a gain of 3.9%. Researchers at Fisdom Research believe that the prospect of a rate cut in September could sustain this positive momentum, attract foreign investment and further improve market sentiment.

The overall picture: Big successes with small pain points.

While the overall Indian market posted gains across the board, not all stocks were able to share in the joy. Paytm shares fell 4.4% after India’s markets regulator scrutinized its 2021 IPO, while Zydus Lifesciences slumped 6% on regulatory approval of a rival generic drug by Teva Pharma. Despite these setbacks, 33 of the Nifty 50 stocks gained, marking the index’s longest winning streak since July 2023.