The Indian stock market witnessed a strong buying trend on Tuesday, August 20, with key indices Nifty 50 and Sensex closing up by half a per cent. This surge was primarily driven by positive global cues, as major markets across Asia and Europe also saw gains. The optimism in the markets was fueled by expectations that US Fed Chair Jerome Powell would provide clear signals on the potential size of a rate cut in September during the upcoming Jackson Hole Symposium this week.
Experts in the market had already factored in a 25 bps rate cut in September, but there were speculations about a possible 50 bps cut next month. This anticipation led to a positive sentiment among investors, resulting in a bullish trend in the Indian stock market.
Sensex closed with a gain of 378 points, or 0.47 per cent, at 80,802.86, while the Nifty 50 settled 126 points, or 0.51 per cent, higher, at 24,698.85. The BSE Midcap index rose by a per cent, and the Smallcap index mirrored the benchmark, increasing by half a per cent. The overall market capitalization of the firms listed on the BSE also saw a significant rise, reaching nearly ₹456.7 lakh crore from nearly ₹454.4 lakh crore in the previous session, making investors richer by over ₹2 lakh crore in a single session.
Intraday trading saw nearly 300 stocks hitting fresh 52-week highs on BSE, including prominent names like TCS, Tech Mahindra, Sun Pharma, and HDFC Asset Management Company. This surge in stock prices reflected the positive sentiment prevailing in the market.
Vinod Nair, Head of Research at Geojit Financial Services, noted that the domestic market started the session with a strong surge, buoyed by positive global sentiment. Factors such as Israel-Hamas ceasefire talks, diminishing US recession fears, easing geopolitical risks, and weak China demand contributed to the positive market outlook. However, caution was advised due to inflationary pressure in Japan and the appreciating Yen, which could impact market trends in the future.
In the Nifty 50 index, 38 stocks closed higher, with shares of SBI Life, HDFC Life, and Bajaj Finserv emerging as the top gainers. On the other hand, shares of Bharti Airtel, ONGC, and Apollo Hospitals ended as the top losers in the index. The Nifty Bank index rose by 0.86 per cent, while the Nifty Financial Services rose by 1.11 per cent. The Nifty PSU Bank and Private Bank indices also saw gains of 1.68 per cent and 1.02 per cent, respectively.
Rupak De, Senior Technical Analyst at LKP Securities, highlighted that the Nifty moved above 24,700 after sustaining above 24,600. The trend is expected to remain strong as long as it stays above the 24,600-24,650 range. A decisive fall below 24,600 might trigger a reversal of the current uptrend, while on the higher end, the Nifty might move towards 24,840-24,860.
In conclusion, the Indian stock market witnessed a positive trend on Tuesday, driven by global cues and expectations of a rate cut in September. Investors are advised to stay informed and consult certified experts before making any investment decisions in the volatile market environment.