Indian shares close at record high on IT stocks boost

Hritam Mukherjee

Updated 1 July 2024 at 6:30 am·2-min read

FILE PHOTO: A man walks out of the Bombay Stock Exchange building in Mumbai, India,

By Hritam Mukherjee

BENGALURU (Reuters) -Indian shares closed at a record high on Monday, driven by gains in information technology stocks on renewed hopes of an interest rate cut by the U.S. Federal Reserve in September.

The NSE Nifty 50 settled 0.55% higher to 24141.95 points, while the S&P BSE Sensex added 0.56% to 79476.19 points as of 3:30 P.M. IST.

Ten out of the thirteen major sub-sectoral indexes ended higher on the day, with heavyweight IT stocks adding about 2%. The gauge was among the top percentage gainers on the day.

"IT stocks are getting a boost from bolstered September rate cut bets after the latest U.S. data signalled resilience in their economy," said Abhishek Goenka, founder and CEO at IFA Global.

A slightly-cooler U.S inflation data on Friday drove hopes of a September rate cut by the U.S. Federal Reserve to 68% from 61% before the data, as per LSEG FedWatch data.

Indian IT companies are sensitive to Fed rate cuts as they earn the bulk of their revenue from their U.S. clients, who have been cutting spending due to higher interest rates.

Tata Consultancy Services, Wipro and Tech Mahindra were among the top gainers on the benchmark, gaining 1.9%-2.9%.

Higher Fed rates also makes stock market investments in emerging markets like India unattractive for foreign investors as elevated U.S. bond yields offer safety over riskier assets.

Meanwhile, auto stocks added 0.5%, after some firms' June monthly sales data showed growth in sports utility vehicles (SUVs). Heaviest stock on the gauge, Mahindra and Mahindra, ended 0.3% up after its monthly total volumes grew 11% year-on-year.

Meanwhile, small- and mid-caps added 1.5% and 1%, respectively, to record highs.

Among individual stocks, GRP jumped 18.8% after its board approved the issue of bonus shares in a 3:1 ratio, while Garden Reach Shipbuilders climbed 9.9% on a $21 million order win.

(Reporting by Hritam Mukherjee and Sethuraman NR in Bengaluru; Editing by Janane Venkatraman and Nivedita Bhattacharjee)

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