In morning trade on Friday, January 12, the domestic market benchmark Nifty 50 surged about 1% to an all-time high. The Nifty 50 opened at 21,773.55, compared to the previous close of 21,647.20, then soared to a new record high of 21,848.20. The Sensex, on the other hand, began at 72,148.07, up from the previous finish of 71,721.18, and climbed more than 1% to an intraday high of 72,447.78. On January 1, this year, the Sensex reached an all-time high of 72,561.91.
IT companies such as Infosys, Tech Mahindra, Wipro, TCS, and HCL Tech were among the top gainers on the Sensex index. During the session, the BSE Midcap and Smallcap indices set new highs of 37,941.29 and 44,626.41, respectively.
Here are four significant elements that appear to have contributed to the Nifty 50's new all-time high:
1. Significant increases in IT stocks
Following TCS and Infosys' December quarter earnings, most IT equities surged to new highs.
In early trade, the Nifty IT index rose more than 5% to a new 52-week high of 36,482.25 points. Shares of Infosys and TCS rose sharply following the release of December quarter earnings.
Infosys recorded a consolidated net profit of 6,106 crore, a decrease of more than 7% from the previous year's figure of 6,586 crore. Its consolidated revenue could increase by only 1.3% to 38,821 crore from 38,318 crore in the same period last year.
TCS reported consolidated revenue of 60,583 crore for the December quarter, representing a 4% year-on-year increase. TCS's revenue increased by 1.5 percent sequentially. Revenue increased by 1.7% year on year in constant currency (CC).
2. Expectations for a strong third-quarter profit
According to experts, market mood is positive due to expectations of strong December quarter profits. TCS and Infosys exceeded initial predictions for muted earnings in the IT sector, exceeding projections and encouraging hopes that other industries will also report improved results for the quarter.
3. The undertone is still upbeat.
Expectations of rate reduction by the US Fed and the RBI in the first half of 2024 have boosted market mood. Furthermore, India's healthy economic prospects is an important component that is keeping market sentiment positive.
Pankaj Pandey, Head of Research at ICICI Securities, stated that market sentiment has recently been favorable. The Nifty 50 has seen some consolidations in recent sessions, but this has provided an opportunity to buy quality stocks. Pandey predicted the Nifty 50 to rise another 500 points in January, reaching over 22,300.
4. Technical aspects
According to brokerage firm ICICI Direct, the Nifty 50 is retracing at a slower pace, having only retraced 38.2 percent of the previous five sessions' up rise (20,977-21,801). Shallow retracements followed by extended rallies above the short-term average indicate intrinsic strength.
"We believe that an ongoing breather after the market's spectacular up move (16%) over the last two months will make the market healthy and pave the way for the next leg of the up move, as strong support is placed at 21300. Thus, an extended pause should not be seen negatively; rather, the emphasis should be on building quality stock portfolios at lower prices," cited ICICI Direct.
"The formation of higher peak and trough backed by sectoral rotation makes us confident to retain support base at 21,300 as its is the confluence of 61.8 per cent retracement of recent up move (20,977-21,834), 20-day exponential moving average (EMA) placed at 21,297, and the past two week's low of 21,329," it said.
