Sensex ends 740 points up, Nifty 50 above 22,300; why did Indian stock market rise today? EXPLAINED with 5 BIG reasons
- Stock market today: Experts list out these five reasons for Sensex, Nifty 50 rise — short covering, weakness in the US dollar, slide in US treasury yields, evaporating Trump's tariff fear, and renewed fear of US inflation
Stock market today: After trading weak for 19 straight sessions, the Indian stock market witnessed strong buying in the early morning session on Wednesday. The Nifty 50 index opened marginally lower at 22,073 but soon caught bulls' attention and finished upside at 22,347, recording an intraday gain of over 250 points. The BSE Sensex today opened upside at 73,005 and ended at 73,730, logging an intraday gain of around 740 points. Today, Bank Nifty opened flat at 48,241 and closed at 48,487, logging an intraday gain of 241 points. The broader market also witnessed strong buying on Wednesday. The BSE Small-cap index finished 2.80 per cent and the Mid-cap index finished 2.66 per cent higher.
After the end of Wednesday's session, 190 BSE-listed stocks ended up in the upper circuit, whereas 193 BSE-listed stocks locked in with the lower circuit. Likewise, 50 BSE-listed stocks finished hittting 52-week high, while 195 BSE-listed stocks ended on Wednesday hitting 52-week low.
Why is Indian stock market rising today?
However, stock market experts believe today's gain in the Indian stock market can be due to short-covering, as investors, especially FIIs, have huge short positions in Indian stocks. Due to the dip in the US dollar and US treasury yields, FIIs might be short-covering their positions, which may lead to a relief rally on Dalal Street. However, they agreed that after Donald Trump's speech in the US Congress, it seems that the market has almost discounted Trump's tariff jibe, and now they are focussed on the renewed fear of US inflation.
Why is Indian share market rising? Top 5 reasons
1] Short covering: “This rally can be a relief rally as the Indian market is rising after trading red for 19 straight sessions. In this period, there was a huge pile-up of short positions, especially by FIIs, who might cover some of their positions after a long gap,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.
2] US dollar hits three-month low: Avinash Gorakshkar said that FIIs might be short-covering after the slide in the US dollar rates, as the American currency has touched its lowest level since December 2024. He said that the US dollar index is trading red today and has come close to the 105.50 mark, which might be why FIIs book profit in the US currency market and cover their short positions in the Indian stock market.
3] Dip in US bond yield: “Even though there was a rise in the US treasury yields on Wednesday, the asset has witnessed some selling in the recent sessions after the profit-booking trigger in the US dollar. This could also be a reason for short covering in the Indian stock market during the early morning session,” said Avinash Gorakshkar.
4] Renewed fear of the US inflation: On why Donald Trump can't dictate the Indian stock market for long, Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “One factor will tame Trump, and that is the market reaction. Even the mighty Trump cannot influence markets. Tariffs will soon raise inflation in the US, and the Fed can turn hawkish.”
5] Evaporating fear of Trump's tariff: “The US stock market, which is now priced to perfection, can suffer a severe correction, even a crash. This outcome, which Trump abhors, can tame him and bring about some sanity and balance in his policies. However, we don’t know when this will happen,” Dr V K Vijayakumar said.
Stock market outlook
Speaking on the outlook for the Indian stock market, Shiju Koothupalakkal, Senior Manager — Technical Research at Prabhudas Lilladher, said, “A decisive move by the Nifty 50 index above 22,500 zone is much needed to establish conviction and expect stability in the coming sessions. Similarly, the Bank Nifty would need a decisive move past the 49200 zone to establish conviction and expect a further rise in the coming days.”
“Sensex today has immediate support at 73,000. A decisive breaking below this support would mean the 30-stock index heading for the next crucial support placed at 72,000. The 30-stock index needs to close above 74,500 to establish a positive conviction,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
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