Stock market benchmarks, the Sensex and the Nifty 50, witnessed healthy gains intraday on Thursday, 20 August, amid largely positive global cues. The 30-share pack Sensex rose more than 600 points to hit an intraday high of 77,514, while the Nifty 50 reclaimed the 24,200 mark, rising 0.60% during the session.
Around 12:10 PM, the Sensex was 532 points, or 0.69%, up at 77,442, while the Nifty was 136 points, or 0.56%, up at 24,214. The rally was broad-based, with the Nifty Midcap 150 index up 0.69% and the Nifty Smallcap 250 index up 0.88% at that time.
The overall market capitalisation of BSE-listed firms rose to over ₹492 lakh crore from ₹488.70 lakh crore in the previous session, making investors richer by over ₹3 lakh crore in a single session.
Top 3 reasons behind the rise in Sensex, Nifty
Here are the three key reasons behind the rise in the Sensex and the Nifty 50:
1. Short covering after recent correction
Market benchmarks are witnessing short covering after a prolonged downtrend. On Wednesday, the Nifty extended losses for the seventh consecutive session, while the Sensex fell for the fourth consecutive session. In seven consecutive sessions, the Nifty declined 2%, while the Sensex lost 1.5% in four days.
Market experts expected a technical bounce due to short covering as the recent correction drove the benchmarks to oversold territory.
“The market, which has been steadily downtrending for the last several trading sessions, appears set for a short-term reversal now. The market is in oversold territory, and a mild rally triggered by short-covering is likely,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
2. A decline in the US dollar, bond yields
A decline in the dollar index and benchmark 10-year bond yields helped ease market concerns, as a stronger dollar and rising yields had heightened the risk of foreign capital outflows from Indian equities. This comes amid persistent concerns over the impact of elevated oil prices on India’s fiscal position, growth-inflation dynamics and corporate earnings.
The dollar index declined 0.83% while the 10-year bond yields crashed 1.13% on 19 August after the US Treasury Department said it would double the size of liquidity support buyback operations for longer-dated notes and bonds.
During trade on 20 August, the US Dollar Index Futures remained flat, while 10-year bond yields declined by a further 0.20% to 4.64%.
3. FPI buying
Experts highlight that buying by foreign portfolio investors (FPIs) could be one of the key reasons behind the market’s rally.
In the cash segment, FPIs bought Indian stocks worth ₹408 crore on Wednesday.
Overall, FPIs have bought Indian stocks worth ₹23,320 crore in August till the 19th after buying stocks worth ₹20,200 crore in July, as per NSDL data.
Top 5 contributing stocks in Nifty 50
HDFC Bank, Bharti Airtel, Eternal, Bajaj Finance and Kotak Mahindra Bank were the top 5 contributing stocks in Nifty 50 around 12:30 PM.
Top 5 contributing stocks in Sensex
HDFC Bank, Bharti Airtel, Bajaj Finance, L&T, and Eternal were the top 5 contributing stocks in the Sensex around 12:30 PM.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
