Sensex beats global markets. Key factors behind today’s 300-point rally

Indian stock markets today rebounded after seeing a sharp correction in the previous session. Some analysts attributed today's upmove to a short-covering rally ahead of tomorrow's weekly derivative expiry. Gains were led by Reliance Industries and financials even as global markets remained mixed today. The NSE Nifty 50 index ended up 0.69% to 10,116, while the benchmark S&P BSE Sensex gained 290 points to 34,247.05.

Heavyweight Reliance Industries added 2.3% while IndusInd Bank Ltd surged 7.7%, to end as the top gainer in the Nifty index. The Nifty banking index ended up 1.81%.

"Sense of optimism is now building in the markets and traders to prefer not to remain short in the market. Today, ahead of the weekly expiry, traders were seen covering short-position in banking and NFBC stocks," said Rahul Sharma, Head of Research, Equity99 Advisors.

Elsewhere, shares of Panacea Biotec Ltd jumped as much as 20%, after the Indian biotech firm said it would partner with U.S.-based Refana Inc to make a potential vaccine for COVID-19.

BSE midcap and smallcap indices also posted strong gains today, rising 0.8% and 0.9% respectively.

Global markets were muted today ahead of outcome of the US Fed's two-day meeting that ends today.

Here is what analysts said on today's market action:

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

“The market took a dramatic turn in the second half of the trading session on buying in private banks and NBFCs, as Nifty continued to hold above the 10000 mark. The market mostly traded in a narrow range due to uncertain global cues and nervousness ahead of the outcome of the US Fed meet. Tomorrow could be the most crucial day for the market as the market has formed a tight range-bound activity and on the dismissal of the trading range, Nifty would enter in trending (impulsive) activity. Above the level of 10150, Nifty would move to 10350 and below the level of 10000, Nifty may fall to 9950.”

Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities

“Markets have been consolidating in the range of 10,000-10,300 since the past few trading sessions. Midcap space witnessed build up in momentum and we expect the same to continue. Currently all data parameters suggest buying on dips. On the sectoral front expect banking and metal stocks to lead while positivity is also seen in auto and commodity space.”

Rahul Sharma, Head of Research, Equity99 Advisors

"Markets will react to the US Fed meet outcome in early trade on Thursday i.e. June 11. We reiterate our view focusing more on banking and financials as they hold the key for further up move in the Nifty else consolidation may continue."

"Of late, foreign portfolio investors too have turned positive on the Indian markets and were seen as net buyers in today's markets. With the gradual easing of lockdown restrictions, traders have now started building up a recovery in the economy which would be led state-owned companies. FPIs too are churning their India portfolio and adding more state-owned companies and debt-free companies."

Manish Hathiramani, Technical Analyst, Deen Dayal Investment

"The markets traded sideways the entire day. What needs to be seen is if we can go past 10200 in the next two trading sessions. If we do that, we would resume the uptrend. Else 10,000 needs to hold, failing which we should be headed southwards."

Vishal Wagh, Research Head, Bonanza Portfolio

"Going forward, 10000 will work as support and 10325 will work as resistance for Nifty. Whereas, Banknifty will find support around 20500 below which a stiff fall can be seen and resistance near to 21680."