Sensex Rallies 1,100 Points On Terrific Thursday, Nifty Atop 22,400: Why is Market Rising?

Indian stock markets witnessed a strong rally in Thursday’s trading session, which happens to be also the last trading session for the week, month and the financial year. The Sensex surged 900 points higher while Nifty50 topped the 22,400 mark.

The combined market capitalisation of all listed stocks on BSE jumped by Rs 2.74 lakh crore to Rs 386.38 lakh crore.

In the process, the benchmark indices were up 2 per cent for the month, and having gained as much as 29 per cent in the fiscal year 2023-24.

Back to the day’s action, analysts attribute today’s rally to the stong domestic inflows coupled with short-covering by foreign investors. DIIs have reportedly net bought stocks worth Rs 24,700 crore in the last seven trading sessions.

Here are the top factors behind the Sensex rally today:

Strong Cues From US Markets

Wall Street equities closed higher overnight, ahead of a key inflation reading later this week. The Dow Jones Industrial Average rose 1.22%, the S&P 500 gained 0.86% and the Nasdaq Composite gained 0.51%.

Asian shares were mixed on Thursday. Chinese markets recouped losses from the day before. Hong Kong’s Hang Seng index gained 1.1% to 16,579.99, while the Shanghai Composite advanced 1.2% to 3,029.01. Australia’s S&P/ASX 200 jumped 0.9% to 7,887.00. Taiwan’s Taiex was little changed. In Tokyo, the Nikkei 225 lost 1.2% to 40,283.44.

Large-Caps in Focus

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believes that strong flows are seen towards large-cap stocks. That apart, expectations of lacklustre movement towards end of the fiscal year by broader market proved wrong, thus triggering strong short-covering today.

That apart, given the fears of further regulatory action against SmallCaps following the MF stress test results, which showed that select funds may take up to 30 days to liquidate 25 per cent of the holdings, is kind-off aiding the sentiment at large-cap counters, added Vijayakumar.

In today’s trade, HDFC Bank and ICICI Bank have accounted for over 200 points gain on the BSE Sensex. Larsen & Toubro, Infosys and SBI have together contributed another 200 points.

Gains in Bank & Financials

Financials rose after the central bank eased recently-tightened rules for lenders’ investments in alternative investment funds (AIFs).

The Reserve Bank of India (RBI) on Wednesday relaxed norms, brought in December, that mandated lenders set aside higher provisions if they bought into alternative investment funds, that, in turn, invested in the lender’s borrowers.

Heavyweights Bajaj Finance and Bajaj Finserv rose about 4% each after news reports said housing finance arm Bajaj Housing Finance had initiated preliminary talks with several investment banks about a potential initial public offer. ICICI Bank and State Bank of India were among the top ten gainers on Nifty 50, adding 1.6% and 1.9%, respectively.

Nifty Technical

After 10 trading sessions, the Nifty 50 has bounced back above its 20-DMA (Daily Moving Average), a short-term trend indicator. Further, key momentum oscillators too have shown positive divergence on the daily charts. Thus, suggesting that the short-term bias is likely to remain favourable as long as the index sustains above its 20-DMA at 22,180 levels.

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