The Sensex and Nifty indices experienced their strongest week of 2024, each surging over 2 percent as anticipation grew for the formation of the Modi 3.0 government. On June 7, the Sensex reached a historic high of 76,795, while the Nifty 50 came within 18 points of its record peak of 23,338 during afternoon trading.This surge coincided with the Reserve Bank of Indias (RBI) decision to keep policy rates unchanged at 6.5 percent for the eighth consecutive time. Market participants viewed this as a steadying influence. Moreover, the RBI revised its forecast for Indias real GDP growth for FY25, raising it from 7 percent to 7.2 percent.Political stability boosts market confidenceAccording to experts, expectations of stability in the central coalition government, along with the RBIs increased FY25 growth forecast to 7.2 percent, triggered a widespread rally in the domestic market.By the close of trading, the Sensex had risen by 1,618 points, or 2.2 percent, reaching 76,693. The Nifty 50 also saw significant gains, up 468 points, or 2.1 percent, ending at 23,290. Market breadth was positive with about 2,586 shares advancing, 810 shares declining, and 80 shares remaining unchanged.IT sector leads the chargeA notable factor in the markets strong performance was an unexpected rally in IT stocks. Comfortable valuations spurred renewed interest in the sector, which had seen limited gains over the past 1.5 to 2 years. The Nifty IT index surged by 3.5 percent, with top performers including Infosys, Tech Mahindra, and TCS. This marked the best week for the sector in four years.Broad-based gains across sectorsIn addition to the IT sector, other sectors also saw significant gains. Nifty Auto, Nifty Energy, Nifty Infra, Nifty Metal, and Nifty Realty indices all closed over 2 percent higher. The broader market reflected this positive sentiment, with the BSE Midcap index closing over 1 percent higher and the BSE Smallcap index gaining over 2 percent.Monsoon and earnings reportsAs the Modi 3.0 government finalizes its ministry allocations over the weekend, market focus is expected to shift towards upcoming monsoon forecasts, Q1 FY25 earnings reports, GDP growth figures, GST collection data, and investment flows. Gaurang Shah, Senior Vice President at Geojit Financial Services, highlighted these factors as key points of interest moving forward.
