The Indian benchmarks jumped to record closing highs on Friday as IT stocks joined an over month-long record-breaking rally after market-leader Tata Consultancy Services's results signalled early signs of recovery in the sector.
The NSE Nifty 50 advanced 0.77% to 24,502.15, while the S&P BSE Sensex added 0.78% to end at 80,519.34 on the day. They rose 0.7% this week, which was their sixth straight week of gains.
The rally started in early June as the national elections ensured policy continuity and due to strong economic growth prospects, record-high inflows from mutual funds and the return of foreign investors.
The Nifty has surged around 9% in that period, hitting all-time highs numerous times and taking its gains for the year to about 13%, outperforming other emerging markets and even most major stock markets.
However, IT stocks had largely sat out the rally on fears of slowing growth due to high interest rates in the United States, a key source of revenue.
But TCS jumped 6.63% after beating quarterly revenue expectations, which analysts said was a sign of a revival in demand.
On cue, IT stocks surged 4.5% jump, also boosted by rising hopes of a U.S. rate cut in September after consumer prices unexpectedly fell in June.
Besides earnings, analysts say the next key event is the national budget on July 23, which will be of particular relevance for capex-linked infrastructure, capital goods, manufacturing and consumption-linked sectors.
"The market seems to be approaching the budget with exuberance and could be dealing with volatility and a correction post-budget, if history is a guide," Morgan Stanley analysts said.
India's retail inflation data for June is due after market hours later in the day. Inflation likely rose to just under 5%, still above the Reserve Bank of India's 4% target to start talking about lowering rates, central bank chief Shaktikanta Das said.
