Sundar Sethuraman/Business Standard

The record-breaking gaining streak in the domestic markets extended to a 13th day on Monday, September 2, 2024, with growing optimism about rate cuts in the US keeping sentiment buoyant.

The benchmark National Stock Exchange Nifty 50 has risen nearly 5 per cent in the past 13 trading sessions between August 13 and September 2. The index had never gained for more than 11 sessions earlier.

After hitting a high of 25,334, the 50-share blue-chip index closed at 25,279, marking a gain of 43 points, or 0.2 per cent. The S&P BSE Sensex ended the session at 82,560, up 194 points, or 0.2 per cent.

Both indices reached new highs both on an intraday and closing basis, with consumer and software stocks leading the charge. BSE-listed firms combined market capitalisation rose by Rs 45,000 crore, reaching Rs 464.9 trillion.

Infosys and ITC drove the gains. Hopes for a recovery in rural demand after a good monsoon bolstered ITCs performance. Information technology stocks, including Infosys, also gained as they generate a major portion of their revenue from the US. However, some analysts cautioned that the bullishness in IT stocks might be irrational.

"Gains in IT stocks have now become momentum-driven. In the past few years, revenue growth in dollar terms has been in single digits," said Chokkalingam G, founder of Equinomics Research.

Foreign investors bought shares worth Rs 1,735 crore, while domestic institutions were also buyers, purchasing shares worth Rs 356 crore.
Traders are expecting the US rate cycle could begin in September, with some speculating on a 50 basis-point cut, according to data compiled by Bloomberg. 

However, some experts believe that the equities rally could lose momentum even if the Federal Reserve implements a cut. Analysts at JPMorgan Chase & Co. said that any interest rate reduction would likely be a response to slowing growth.

Analysts said that the US economy is not out of the woods yet, with elevated geopolitical and political uncertainty. Moreover, September has historically been a weak month for US equities.

The lack of revival in the Chinese economy despite multiple rounds of the stimulus also weighs on investors' minds.

In addition to the US elections, initial jobless claims, non-farm payroll data, and other macroeconomic indicators from around the globe will influence the markets trajectory.

"The Indian market continues to hold its ground and sustain new highs with marginal positivity. The positive trend is broadly maintained as domestic economic growth remains healthy and Purchasing Managers Index (PMI) numbers are well above the long-term average, indicating an uptick in earnings in the coming quarters," said Vinod Nair, head of research at Geojit Financial Services.

"However, volatility has increased as first-quarter gross domestic product growth has moderated, and a similar trend has been observed in corporate earnings. Also, August PMI readings were marginally below Julys numbers, indicating that caution is in the air," Nair added.

The market breadth was negative, with 2,262 stocks declining and 1,776 advancing. Two-thirds of Sensex stocks gained. The Nifty Smallcap 100 and Nifty Midcap 100 indices ended with losses. Bajaj Finserv and Bajaj Finance were the best-performing Nifty stocks.