Stock Market Today: Sensex jumps 1100 points, Nifty 50 above 24,400. Five key reasons why Indian stock market is rising

The Indian stock market benchmarks, Sensex and Nifty 50, surged over 1% each on Monday, marking a strong start to the final week of the month. This uptick in domestic equities follows five consecutive sessions of significant declines, driven by persistent foreign fund outflows and underwhelming corporate earnings for the September quarter.

On Monday, the BSE Sensex opened higher at 79,653.67, compared to the previous close of 79,402.29, and continued its upward trajectory, gaining over 1.3%. Similarly, the NSE Nifty 50 opened at 24,251.10 against the previous close of 24,180.80, and is rallying more than 1% to trade above the 24,400 mark.

All the sectoral indices were trading in the green and the broader markets, Nifty Midcap 100 and the Nifty Smallcap 100 indices, also supported the gains.

Shriram Finance, Mahindra & Mahindra, ICICI Bank, Adani Enterprises and IndusInd Bank were the top gainers on the Nifty 50, while Coal India, Bharat Electronics (BEL), Tech Mahindra, SBI Life Insurance Company and Axis Bank were the top losers.

“A significant market trend during the recent days of market correction is the flight to quality. While the Nifty corrected by 8.3% from the recent peak, the mid and small cap indices corrected by 9.8% and 9.3% respectively from their recent peaks. Actually the index movements conceal the carnage in the mid and smallcaps where the correction has been above 30% in dozens of stocks and even by more than 40% in some momentum stocks. It is important to know that many largecaps are steady in this volatile market,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Here are five key reasons why stock market is rallying today:

Global Cues

Asian markets traded higher, lending positive sentiment to domestic equities. Japanese stocks experienced a robust rally on Monday as the yen dropped to a three-month low following Prime Minister Shigeru Ishiba’s coalition losing its parliamentary majority in Sunday’s election. Most other Asian markets also trended positively on Monday morning.

Short Covering

The Indian stock market is experiencing a short-covering rally on Monday after five consecutive days of steep declines. The Nifty 50 had fallen by 2.58% last week, marking its fourth consecutive week of losses, analysts said.

“The trend of flight to quality is likely to sustain given the good numbers from banking majors like HDFC Bank and ICICI Bank where valuations continue to be fair. Investors can profit from these polarised valuations. The global market structure may turn favourable after the subdued Israeli strikes against Iran avoiding the Iranian oil fields which has resulted in a sharp drop in crude prices. The imminent US presidential elections and the uncertainty associated with that will continue to weigh on markets,” said Vijayakumar.

Sectoral Trends

All sectoral indices posted solid gains on Monday, with Nifty PSU Bank, Nifty Metal, Nifty Auto, and Nifty Realty leading the rally.

The upward momentum in the Indian stock market today was strongly supported by gains in banking stocks, with notable surges in Bank of Baroda, Canara Bank, ICICI Bank, and Punjab National Bank (PNB). Positive Q2 results from ICICI Bank further boosted market sentiment, which lifted Bank Nifty above 51,400 level.

Technical factor

On Friday, the Nifty 50 made a low at its support of 24,100 levels and bounced during the last session of the day. On a daily chart, the index formed a bearish candle with a big wick on the downside, indicating strong buying, which came nearing the closing session.

On the upside, Nifty 50 broke its resistance level at 24,400 today, and analysts believe a breakout above this level could potentially lead the index extending gains to 24,750.

“The Nifty could attempt a bounce this week, according to historical patterns for the current week in seasonal data. This week is the 44th week of the calendar year, and a 10-year analysis starting from 2014 indicates that the market has ended higher 80% of the time during this week, with an average gain of 1.4%. In fact, the last time this week ended in the red was eight years ago in 2016,” said Akshay Chinchalkar, Head of Research, Axis Securities.

According to him, the tactical trend remains down and any bounce on the Nifty 50 will face stiff resistance in the 24,413 – 24,462 area, while support lies at 24,073. Any break below this support will bring the all-important 23,779 into the picture.

Crude Oil

Crude oil prices tumbled more than 4% on Monday after Israel’s weekend strike on Iran bypassed oil or nuclear targets, easing geopolitical tensions in the Middle East.

Brent crude oil declined 4.31% to $72.77 a barrel, while the US West Texas Intermediate (WTI) crude futures plunged 4.49% to $68.56. Both Brent and US WTI crude futures hit their lowest levels since October 1 at the open.

“As a major importer, India benefits from reduced crude costs, which can help stabilize inflation and, in turn, strengthen consumer purchasing power. This relief in inflationary pressures also opens up space for RBI to maintain or consider further rate cuts, supporting broader economic growth,” said Pranay Aggarwal, CEO, Stoxkart.

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