Sensex, Nifty post weekly gains on Federal Reserve optimism

The Sensex and Nifty rose on Friday, securing weekly gains, buoyed by a rally fuelled by investor optimism surrounding the Federal Reserve's commitment to maintaining its rate-easing stance throughout the year.

The NSE Nifty 50 index closed 0.39 per cent higher at 22,096.75, while the BSE Sensex added 0.26 per cent to settle at 72,831.94. Both benchmarks recorded gains of approximately 0.3 per cent for the week, with auto and realty stocks leading the charge.

Auto stocks surged by 1.67 per cent, contributing to weekly gains of 4.23 per cent. Companies like Mahindra and Mahindra, Maruti Suzuki, Tata Motors, Hero MotoCorp, Bajaj Auto, and Eicher Motors witnessed gains ranging between 2 per cent and 8 per cent over the week.

According to Neeraj Dewan, Director at Quantum Securities, the market sentiment has been bolstered by the Fed's clarity on rate cuts, which is expected to continue driving the rally in the coming sessions.

Dewan attributed the positive performance of auto stocks to the drop in Brent crude prices, a key raw material for the sector.

The dovish commentary from the Federal Reserve also benefited domestic rate-sensitive sectors such as auto and realty, raising hopes for rate cuts by India's central bank in the latter half of 2024, Dewan added.

Realty stocks gained 5.34 per cent for the week, while metals added 4.21 per cent. JSW Steel and Tata Steel witnessed gains of 4 per cent-7.5 per cent following strong data from China and the weakening of the US dollar after the Fed's commentary.

However, IT stocks experienced a decline of 6.17 per cent, despite the positive sentiment, weighed down by Accenture's revenue forecast downgrade for fiscal 2024. Companies like Wipro, Tata Consultancy Services, HCLTech, LTIMindtree, and Infosys fell between 3.5 per cent-8 per cent for the week.

The broader small- and mid-cap segments outperformed the benchmarks, rising approximately 1.4 per cent each for the week. Avinash Gorakshakar, Head of Research at Profitmart Securities, cautioned that while Fed positivity spilled over to broader markets, concerns over high valuations remain for small- and mid-caps.

The domestic markets will remain closed on Monday due to a holiday.

(With Reuters inputs)