Strong global cues, coupled with stronger rupee, drove domestic markets higher in Tuesday’s trade. The Nifty50 climbed over 300 points to trade above 17,200 levels in the intra-day deals, a level last seen on September 23, whereas the S&P BSE Sensex surged over 1,200 points to hit a high of 58,035 levels.
Fresh bets across heavyweights like Bajaj Twins, HDFC Twins, Tata Consultancy Services, and Reliance Industries also contributed to gains in the benchmark indices.
The renewed risk appetite among investors spread across broader markets, too, as the Nifty MidCap100, and Nifty SmallCap100 rose over 1 per cent each. Sectorally, the Nifty IT, Bank, and Metal indices led the charge as they advanced over 2 per cent each.
Going ahead, the bullish sentiment is likely to sustain this October as it has in the last eight out ten years, analysts said.
“In the last eight out of ten years, Sensex has given positive returns in October. Also, markets have a record of troughing out in October. This may happen this October too. The ‘risk-off, risk-on’ texture of the market is in response to fast changing economic and market signals. For the near-term, the market sentiments have turned positive with declining trend in the US dollar, and bond yields. If this trend continues, FIIs will again turn big buyers in India, and they will not get stocks cheap,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
He said financials and autos are again set to lead the uptrend since their fundamentals and prospects are strong. Besides, capital goods, and telecom are likely to join the rally, he added.
Here are the top factors behind Tuesday’s bull run:
Firm global cues: After the sharp decline last week, the US markets rebounded in Monday’s trade after 10-year, and 2-year treasury yields dropped to 3.6 per cent, and 4.1 per cent, respectively, on weaker-than-expected manufacturing data. All three major indexes in the US markets – Dow Jones, NASDAQ Composite, and the S&P 500, closed over 2 per cent higher, to start the final quarter of the year on a positive note. Besides, US equity futures, too, held ground on Tuesday as Dow Jones Futures traded over 200 points higher to 0.8 per cent.
The strong sentiments spilled across markets in Asia-Pacific, too, as Nikkei 225, Topix, Kosdaq, and S&P 200 climbed in the range of 2 per cent to 3 per cent in Tuesday’s trade.
FII buying: A strong start to October series was seen as FIIs made a soft landing in the cash segment of Indian equity markets. FIIs bought Rs 590 crore worth of Indian equities on Monday, October 3, as against outflows of Rs 423 crore worth of equities by the domestic institutional investors.
Relief in rupee: The rupee strengthened by 39 paise to 81.42 against the US dollar in Tuesday’s early trade, on the back of strong domestic cues, and weakness in the global greenback. The dollar index, which gauges the greenback against a basket of six currencies, slipped 0.1 per cent to 111.5. However, the 0.4 per cent rise in prices of Brent Crude ahead of the OPEC+ meet limited upward movement of the domestic currency.
Gains across heavyweights: The positive sentiment and reduced risk appetite among investors lifted shares of index heavyweights. Shares of Bajaj Twins, HDFC Twins, Tata Consultancy Services, ITC, Reliance Industries surged in the range of 1 per cent to 3 per cent in Tuesday’s intra-day trade.