Nifty 50 Index Rally Persists As IT Stocks Propel Gains to New ATH

Summary:
• Indian IT stocks led by Tata Consultancy rose on Friday, providing fuel to the Nifty 50 Index to hit sustain its rally to new record highs.

The Nifty 50 Index hit new all-time highs on Friday after gaining 0.9 percent to hit 24,592 points. The rally was led by Tata Consultancy Service’s spike by 6 percent after the IT giant reported better-than-expected earnings. The company’s revenue came in at 12,040 crore in its latest yearly financials, up from from Rs 11,074 crore a year earlier.

The results triggered a strong show by other Indian IT stocks, with HCL Technologies rising by 3.4 percent, Infosys at +3.5 percent and Wipro at +5.3 percent.  Overall, Nifty IT stocks were up by 4.9 percent as of this writing. The Nifty 50 Index has risen by 2.3 percent in July, beating other indices like Sensex (+2.1 percent), FTSE 100 (+1 percent) and the Dow Jones (+1.7 percent).

Away from India, the Nifty 50 Index has also been boosted by accommodative US economic data released on Thursday. After a prolonged period of speculation about the likelihood of interest rate cut in September, the US inflation data solidified the view. The monthly Consumer Price Index (CPI) fell to -0.1 percent in June, below the forecast rate of 0.1 percent. The annualized figure came in at 3 percent, below the forecast 3.1 percent.

Added to the forecast-beating unemployment rate in June and the lower-than-expected PCE figures, it is now more likely that the Fed will slash interest rates in September. Lower interest rates in the US will have ripple effects across the world, with the Indian stock markets likely to be among the top beneficiaries.

Technical analysis

The Nifty 50 Index will likely continue with the upside if it stays above the 24,500 points pivot mark. The upward movement will likely encounter the first resistance at 24,620, but a break beyond that point could strengthen the upside to move the index to test the next barrier at 24,650. On the other hand, a move below 24,500 will favour the sellers to take control. They will likely find the first support at 24,480, and a move below that mark will invalidate the upside narrative. Furthermore, the resulting momentum could take the Index to test 24,450.