The Indian stock market began the week on a positive note, with both the Sensex and Nifty showing gains in early trading. The BSE Sensex index opened approximately 227 points higher, a 0.28% increase, reaching 81,533, while the Nifty started at 24,938, up by 68 points or 0.27%.
IT Stocks Lead the Charge
The rally was primarily fueled by Information Technology (IT) stocks. The Nifty IT index emerged as the top-performing sectoral gauge, surging by 1.8%. Key players in the IT sector, including Wipro, Infosys, TCS, HCLTech, and Tech Mahindra, were among the top gainers. Specifically, Infosys share price jumped 3.19% to ₹1,486, while Tata Consultancy Services (TCS) shares added 2.21% to ₹3,083.
Global Cues and US Federal Reserve
The positive momentum in the Indian market mirrored gains in Asian markets and US stocks. This optimistic sentiment followed hints from U.S. Federal Reserve Chair Jerome Powell about potential interest rate cuts in September, which boosted investor confidence. Powell's remarks at the Jackson Hole Symposium suggested a likely rate cut in September, influenced by a shifting risk balance and potential downside risk to unemployment. Lower US interest rates generally make emerging markets, including India, more attractive to foreign investors, and tend to weigh on U.S. Treasury yields and the dollar, supporting risk assets globally.
Other Sectoral Performances
Besides IT, other sectors also contributed to the market's gains. The Nifty Realty index increased by 0.8%, and the Nifty Metal index rose by 0.5%. The BSE Midcap and Smallcap indices also saw gains, rising by 0.37% and 0.35%, respectively. FMCG was also up by 1.39%.
Potential Concerns
Despite the overall positive sentiment, concerns remain. According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, potential tariffs could overshadow the positive impact of the expected US Federal Reserve rate cut in the Indian markets. The possible 25% penal tariff on India for buying oil from Russia, potentially taking effect from August 27, could negatively impact exports and jobs in labor-intensive sectors like textiles, gems and jewellery and leather. Also, the Nifty 50 index is facing an immediate hurdle at 25,200.
Market Outlook
While early positivity is expected, the Nifty's ability to hold above 25,115 will be critical. According to Anand James, Chief Market Strategist at Geojit Financial Services, a fall below 24,740 could trigger a drop toward 23,860. Sumeet Bagadia, Executive Director at Choice Broking, believes the Indian stock market sentiment has taken a cautious stance after making weekly gains and a bullish or bearish trend can be assumed on the breakage of either side of 25,150.
