Nifty crosses 20,000 for the first time since September; 5 key factors driving the rally | Mint
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Business News/ Markets / Stock Markets/  Nifty crosses 20,000 for the first time since September; 5 key factors driving the rally
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Nifty crosses 20,000 for the first time since September; 5 key factors driving the rally

The Nifty 50 index crossed above the 20,000-mark for the first time since September 2023, driven by positive global cues and strong gains in index heavyweights.

The combined market valuation of all BSE-listed companies reached the $4 trillion milestone for the first t (Photo: ANI)Premium
The combined market valuation of all BSE-listed companies reached the $4 trillion milestone for the first t (Photo: ANI)

The Indian stock market witnessed a stellar rally on Wednesday, with the benchmark Nifty 50 index crossing above 20,000-mark for the first time since September 2023, amid positive global cues. Strong gains in index heavyweights like M&M, Tech Mahindra, HDFC Bank, Reliance Industries, among others lifted the market for the second consecutive session.

The Nifty Midcap 100 index hit a record high, while Nifty 50 is now just 1% away from its all-time high of 20,222.45 hit on September 15. The BSE Sensex hit its all-time peak of 67,927.23 on the same day.

Meanwhile, the combined market valuation of all BSE-listed companies reached the $4 trillion milestone for the first time ever.

Led by the optimism in equities, the market capitalisation of BSE-listed companies crossed 333.26 lakh crore in morning trade, translating into $4 trillion at the exchange rate of 83.31.

Read here: Market cap of BSE-listed firms hit $4trillion mark for the first time ever

While the BSE benchmark Sensex has rallied 5,540.52 points or 9.10% so far this year, the market capitalisation (m-cap) of all listed firms at its platform have jumped about 50.81 lakh crore.

The other markets valued more than $4 trillion of m-cap include the US, China, Japan and Hong Kong.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services advises investors to take cues from the wisdom of the investment legend Charlie Munger who died yesterday. Munger advised investors: don’t be gamblers, be patient investors. 

“There is a lot of gambling happening in the market now in low grade stocks. These should be avoided. Investors should buy quality stocks which are fairly priced, and wait patiently. There is value in largecap banking, IT  and autos for patient investors. A big move in the market is likely after the state election results are known. Perhaps the exit polls tomorrow evening may provide some clues," said Vijayakumar.

At 11:50 am, the Sensex was trading 456.49 points, 0.69%, higher at 66,630.69, while the Nifty 50 was up 135.90 points, or 0.68%, at 20,025.60.

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Here are the factors driving the rally in the Indian stock market today:

Global cues

Dovish commentary from the US Federal Reserve official raised expectations of interest rate cuts next year, lifting sentiment for risky assets.

“I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%," said Governor Christopher Waller, one of the most hawkish Fed officials.

Following the comments, the yield on the benchmark US 10-year Treasury note on Tuesday fell 2 basis points to 4.31%, while the dollar index fell to a more than three-month low of 102.57. 

“Since the global market backdrop continues to be favourable, the rally in India is likely to continue. The drop in US 10-year bond yield to 4.3% and the dollar index dropping below 103 are positive for equity markets. FIIs have turned buyers responding to the changed reality," said Vijayakumar.

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Heavyweights gains

Rally in index heavyweights also lifted NIfty 50 above 20,000 levels. Shares of Reliance Industries, HDFC Bank, Bharti Airtel, Axis Bank, Hero MotoCorp, Wipro, Tech Mahindra, among others were up around 1-2%.

The gains were largely fueled as the Federal Retirement Thrift Investment Board announced the probable transition to the new MSCI Index.

According to Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research, the move is expected to lead to $809 million inflows for Indian stocks such as Reliance Industries, ICICI Bank, Infosys, HDFC Bank and Tata Consultancy Services (TCS). 

Technical Factors

The Nifty 50 index broke out upwards after a gap of almost 6 weeks on November 28.

“It made a new swing high and made higher lows for the last few sessions. It could now head up towards the 19,980-20,115 band while the 19,765-19,811 band could offer support on falls. Rise in Nifty accompanied by high volumes suggest return of FPIs on the buy side," said Deepak Jasani, Head of Retail Research, HDFC Securities.

Also Read: Gold price touches new peak as US dollar index hits three month low. Should you buy in this rally?

According to Shrey Jain, Founder and CEO, SAS Online, the Nifty 50 index is anticipated to find support in the 19,800-19,835 range, with a robust buy zone identified at 19,700-19,765. 

“In the case of the Nifty Bank, support is expected around 43,675-43,775 levels, with a strong buy zone identified at 43,450-43,575 levels," Jain said.

FII buying

On Tuesday, the Foreign institutional investors (FIIs) net bought Indian shares worth 783.82 crore, while Domestic Institutional Investors (DIIs) net purchased shares to the tune of 1,324.98 crore, as per provisional data available on the exchanges.

Drop in oil prices 

A drop in crude oil prices also helped gains in Indian markets. Brent crude futures, the global benchmark, fell 0.06% to $81.63 a barrel.

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 taking any investment decisions.

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Published: 29 Nov 2023, 11:51 AM IST
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