Nifty 50, Sensex jump 1% each; why is Indian stock market gaining today? — explained with 5 critical reasons

The Nifty 50 and the Sensex, key indices of the Indian stock market, opened on a positive note and surged by over one per cent each. 

The majority of components within these indices showed gains, reflecting a broad-based optimism among investors. 

Heavyweight stocks such as HDFC Bank, Reliance Industries, SBI, and Larsen and Toubro were among the top contributors to the upward momentum of the Sensex index.

Around 11:15 am, the Sensex was 1.05 per cent up at 72,861 with only one stock – Nestle (down 0.17 per cent) – in the red.

The Nifty 50 was up 1.09 per cent at 22,076 with only two stocks – Hero MotoCorp (down 0.80 per cent) and Nestle (down 0.21 per cent) – in the red at that time.

Mid and small-cap stocks were experiencing notable momentum, outperforming the benchmark indices. Both the BSE Midcap and Smallcap indices surged by 2 per cent each during the session.

Experts highlighted the following five significant factors driving the surge in the domestic stock market today. Take a look:

1. Fed signal on rate cuts

The US Federal Reserve left the benchmark interest rates untouched at the range of 5.25 per cent to 5.50 per cent on Wednesday and signalled there could be three rate cuts this year. This move seemed to uplift market sentiment, as investors eagerly sought clarity regarding the trajectory of interest rate cuts.

2. Positive global cues

Positive global indicators also influenced domestic market sentiment. Major Asian indices like Korea’s KOSPI and Japan’s Nikkei surged by 2 per cent following the US Federal Reserve’s reaffirmation of its intention to proceed with interest rate cuts.

3. Across-the-board buying

Almost all sectoral indices witnessed buying in intraday trade on Thursday. Nifty Bank jumped over a per cent while the sectoral indices of PSU bank and metal on the NSE rose over 2 per cent each.

Over 80 stocks, including Bharti Airtel, Maruti Suzuki, CG Power DMart and Thermax, hit their fresh 52-week highs in intraday trade on BSE.

Also Read: Nifty IT index breaks 4-day losing streak, climbs 1.50% as Fed maintains rate cut forecast

4. Growing might of domestic investors

Experts have noted that the increasing influence of domestic institutional investors (DIIs) has emerged as a significant driving force behind the recent resilience of the domestic market.

“The tug of war between FIIs and DIIs has been won by the DIIs for some time now. This trend will continue if the FIIs continue to sell, and, therefore, FIIs are likely to slow down their selling and may turn buyers. This will be positive for large caps in banking, telecom, capital goods and automobiles,” said Vijayakumar.

Also Read: BSE share price jumps 8% after Investec upgrades stock to ‘Buy’, sees 38% upside potential

5. Technical factors

Prashanth Tapse, Senior VP (Research) at Mehta Equities believes Nifty is poised for significant gains, supported by optimistic economic projections.

“With interest rates held steady, Nifty’s immediate targets stand at 22,000 and 22,527, while downside risks are limited. Attention is on SBI electoral bonds details, with market volatility expected below 21560,” said Tapse.

According to Sameet Chavan, Head of Research – Technical and Derivative at Angel One, on the higher end, the 22,000 mark withholds the sturdy hurdle and an authoritative attainment could only bring back some relief.

On the lower end, the potential downside looks deep, with 21,700-21,650 as an intermediate pitstop for the bears, breaching which 21,550-21,500 would be in the range, said Chavan.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 21 Mar 2024, 11:07 AM IST