Benchmark equity indices settled at record closing highs on Thursday, June 13 led buying in IT stocks after US inflation data boosted expectations that the US Federal Reserve would lower interest rates sooner rather than later.
The positive trend also followed after retail inflation declined in May. The government data showed India’s CPI (Consumer Price Index) easing to 4.75 per cent in May 2024, it was 4.83 per cent in April 2024.
The 30-share BSE Sensex jumped 204.33 points or 0.27 per cent to settle at a record 76,810.9, after scaling an all-time high of Rs 77,145.46. NSE Nifty rallied 75.95 points or 0.33 per cent to settle at a record 23,398.9, after scaling a fresh all-time high of 23,481.05.
“The domestic equity benchmark traded with a modest gain, with domestic CPI data indicating that inflation is on a slow track of decline. A similar trend is reported in the US CPI, which brought down the market expectation from 2 rate cuts in CY24 to 1, which is having a mixed effect on the global markets,” Vinod Nair, Head of Research, Geojit Financial Services said.
Prospects of above-normal monsoon
India Meteorological Department (IMD) has predicted an above-normal monsoon this year. Experts hope the timely arrival of monsoons and abundant rains will ease inflationary pressure and underpin India’s economic growth.
Monsoon is crucial for India’s agricultural sector, which contributes about 14 per cent to the country’s gross domestic product (GDP). Around 56 per cent of the net cultivated area and 44 per cent of food production depend on monsoon rainfall. Therefore, monsoon is critical for healthy crop production, which helps maintain food prices and support growth.