Sensex, Nifty end at record closing peaks; check out key factors that drove the market rally today

Nifty today, Sensex today, Why is Nifty rising today: In-line Q3 numbers by IT giants Infosys and TCS spawned a new lease of optimism among market participants on Friday, January 12. The absence of any bad news turned out to be terrific news for investors as they rushed to lap up the technology stocks, pushing the benchmark indices to record levels.

The Nifty50 index, after a short hiatus, again marked a new high of 21,848,2, up 0.93 per cent during the trade. The S&P BSE Sensex, too, rallied over 740 points to 72,463.99 levels.

Here is the list of factors that pushed the Nifty to a new record high today:

IT stocks lead rally

D-Street investors cheered IT giants TCS and Infosys' Q3 earnings, which were in line with analysts' estimates. The Nifty IT index clocked a new 52-week high, with good gains of over 6 per cent and 4 per cent in TCS.

“Better than expected earnings from frontline IT firms have boosted investors’ confidence, triggering an upsurge in Infosys, TCS, and software stocks. Despite a seasonally weak quarter exacerbated by global macroeconomic headwinds, Indian IT majors reported neutral to better earnings in their Q3 earnings," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Comparatively, TCS performed well across various metrics, while Infosys made some adjustments to its future guidance. Post the results, we continue to remain optimistic on the sector for the long term," the expert added.

Analysts at IDBI Capital wrote in their Q3 review note on TCS that while the macro is uncertain, they believe TCS will continue to win cost optimisation, vendor consolidation, and integrated operations types of deals.

Expectations of a Fed rate cut

Even as the US markets posted weak performance in overnight trade after US CPI inflation came in higher than expected, Indian markets remained buoyant. The impact is not seen, even as the latest inflation data dampened hopes of an early rate cut by the US. Nevertheless, traders still anticipate a cut as early as March, according to the CME Fedwatch tool.

Rally in Japan’s index to over a 34-year high

Amid ultra-dovish policy expectations, Japan’s Nikkei hit a 34-year high. The positive mood in global markets is also being reflected in Indian markets.

Heavyweights spur gains

Heavyweight stocks, including Reliance Industries (RIL) and HDFC Bank, also spurred the rally. Market participants are awaiting HDFC Bank results, scheduled to be released on January 16, to assess the direction of banking stocks.

Technical View

At the current juncture, Nifty is at an all-time high; a daily close above 21,900 will take the index to the 22,000 historical mark, said Jigar S. Patel, Sr. Manager, Equity Research, at Anand Rathi Wealth. However, the expert opined that one should avoid adding fresh longs at the current juncture and wait for meaningful corrections.

"Benchmark Index (Nifty) has not only ended the week at record levels but also given a bullish Flag and Pole Formation breakout on the daily chart which indicates an extension of the current underlying uptrend. As per the pattern, the target is 22,330," mentioned the Weekly Market Wrap-up Report by Progressive Shares.

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