Indian stock market benchmarks the Nifty 50 and the Sensex closed with significant gains on Thursday, March 21, on across-the-board buying amid positive global cues after the US Fed signalled on Wednesday it could cut rates three times this year.
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 during the session.
The Sensex closed 540 points, or 0.75 per cent, up at 72,641.19 while the Nifty 50 ended the day at 22,011.95, up 173 points, or 0.79 per cent.
Only 10 stocks ended in the red in the Nifty 50 pack.
Shares of NTPC (up 3.62 per cent), BPCL (up 3.59 per cent) and Power Grid (up 3.38 per cent) closed as the top gainers in the Nifty 50 index.
On the flip side, shares of Bharti Airtel (down 0.71 per cent), HDFC Life Insurance Company (down 0.62 per cent) and Maruti Suzuki (down 0.36 per cent) ended as the top losers in the Nifty 50 pack.
Mid and smallcap indices outperformed the benchmarks. The BSE Midcap index jumped about 2.36 per cent while the Smallcap index rose 2.01 per cent.
Also Read: Contrarian view: 4 reasons why Anand Rathi expects midcaps and smallcaps to outperform in the upcoming year
The overall market capitalisation of BSE-listed firms jumped to nearly ₹380 lakh crore from nearly ₹374 lakh crore in the previous session, making investors richer by about ₹6 lakh crore in a day.
Over 100 stocks, including Bharti Airtel, Maruti Suzuki, Cummins India, CG Power DMart and Thermax, hit their fresh 52-week highs in intraday trade on BSE.
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.
“The uncertainty regarding the Fed decision is over with the Fed keeping the rates unchanged and refraining from a hawkish message. The Fed chief’s statement that inflation has eased substantially while the labour market has remained strong conveys conviction about the soft landing of the US economy and the possibility of probably three rate cuts this year,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.Also Read: Fed signals three rate cuts this year; how will it impact equities and gold? Experts weigh in
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 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.
Among the sectoral indices, Nifty Realty jumped 3 per cent, followed by Nifty Metal (up 2.44 per cent) and PSU Bank (up 2.14 per cent).
Nifty Bank index closed 0.81 per cent higher.
Also Read: Reliance share price up 45% in last one year. Is it time to book some profit? Here’s what experts say
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
Rupak De, Senior Technical Analyst at LKP Securities observed that the Nifty rallied following a Doji candlestick pattern on the daily chart, indicating a robust bullish reversal. The index successfully reclaimed the crucial 50-day simple moving average (SMA).
“Looking ahead, the Nifty could potentially extend its gains towards the range of 22,250-25,300. Moreover, a breakthrough above 22,300 may initiate a rally towards 22,500 and beyond. The buy-on-dips strategy is expected to remain viable as long as the Nifty maintains levels above 21,840,” said De.
According to Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, the Nifty is in the process of retracing the fall it has witnessed from 22,526 to 21,710. The key retracement levels are placed at 22,118 – 22,214.
“The rally is likely to continue over the next few trading sessions. Intraday dips towards support zones 21,950 – 21,930 should be used as a buying opportunity,” said Gedia.
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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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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
