Stock market today: Sensex jumps 1,000 points, Nifty 50 above 24,300; Here’s what is driving the rally on Dalal Street

Indian stock market benchmark indices, Sensex and Nifty 50, opened with strong gains on Wednesday led by broad-based rally supported by positive global cues.

The BSE Sensex opened 972.33 points, or 1.23%, higher at 79,565.40, while the NSE Nifty 50 opened 296.85 points, or 1.12% higher at 24,289.40. Rally was also supported by the board markets as the Nifty Smallcap 100 and the Nifty Midcap 100 index surged over 1% each.

All the sectoral indices were trading in the green, with the Nifty Auto, Nifty IT, Nifty Metals, Nifty Realty and Nifty FMCG leading the gains.

ONGC, Coal India, BPCL, Hero MotoCorp and Mahindra & Mahindra were the top gainers on the Nifty 50, while Asian Paints, Kotak Mahindra Bank and Titan Company were the only ones among Nifty 50 constituents to trade lower.

“After the twin jolts from US recession fears and the unwinding of the Yen carry trade, stock markets globally are slowly limping back to stability. The message from the Bank of Japan that ‘rates will not be hiked when markets are unstable’ will help in stabilising the Yen and prevent further massive unwinding of the Yen carry trade,” said said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Even though FIIs were big sellers in India in the cash market during the last three days, their selling is being matched by DII buying. This countervailing investment by DIIs can impart resilience to the market, he added.

Here are key factors that are driving the stock market rally today:

Global Markets

Global market cues remained positive as the Asian markets traded higher and the US stock market closed with strong gains overnight.

Asian markets extended their rally on Wednesday, led by another bounce in the Nikkei, after the Bank of Japan turned cautious on rate hikes.

Japan’s Nikkei surged 2.3% following a 10% rally on Tuesday. The index had slumped 13% on Monday. Hong Kong’s Hang Seng surged more than 1.26%, while Taiwan’s Weighted Index gained over 3.5% on Wednesday trading.

US stock markets also ended with sharp gains on Tuesday, with the S&P 500 and Nasdaq indices each surging more than 1%.

BOJ on Rate Hike

Bank of Japan’s deputy governor Shinichi Uchida, in a speech to business leaders, said the central bank won’t hike interest rates when markets are unstable, playing down the chance of a near-term hike in borrowing costs, Reuters reported.

The remarks by Uchida led to a sharp fall in the yen and boosted Nikkei share average, fuelling a rally in markets across the region. The dollar jumped 1.9% to 147.03 yen and away from the 141.675 trough hit on Monday.

Indexation Benefits

The government’s proposal to restore indexation benefits on property sales boosted sentiment for the real estate stocks. The government has moved an amendment to the Finance Bill allowing long-term capital gains taxes on property acquired prior to July 23, 2024, to be calculated under the new 12.5% rate without indexation and the old 20% rate with indexation and allowing taxpayers to choose among these options.

Nifty Technical View

According to Sameet Chavan, Head Research, Technical and Derivative - Angel One, as for key levels, 24,250 appears to be immediate resistance, while the 24,350 - 24,400 range remains a challenging barrier for the bulls.

“Only a close above this range could potentially revive some positive momentum in the market. On the downside, immediate support is seen at 23,900 - 23,850, below which the Nifty may slip towards the 23,600 - 23,550 levels. Traders are advised to monitor these levels closely and adjust their trades accordingly, while also keeping an eye on global developments, as our markets are particularly influenced by global momentum,” Chavan said.

Stock Market Strategy

Vijayakumar said it appears that the exuberance of retail investors has taken a knock after the crash in the broader market.

“Market valuations continue to remain elevated. There is value in financials. At this juncture in the market, investors should prioritise largecap investment over the mid and small caps,” he said.

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 making any investment decisions.