The Indian stock market witnessed healthy buying for the third consecutive session, with the benchmark Sensex rising 600 points and the Nifty 50 reclaiming 25,850 during the session on Wednesday, November 12.
The Sensex rose 781 points, or nearly 1 per cent, to an intraday high of 84,652, while the Nifty 50, too, rose by nearly 1 per cent, to an intraday high of 25,934.55.
Finally, the Sensex ended 595 points, or 0.71 per cent, higher at 84,466.51, while the Nifty 50 settled at 25,875.80, up 180.85 points, or 0.70 per cent.
The BSE Midcap and Smallcap indices rose by 0.44 per cent and 0.76 per cent, respectively.
Investors earned about 5 lakh crore in a single session as the overall market capitalisation of BSE-listed firms rose to ₹473.6 lakh crore from ₹468.9 lakh crore in the previous session.
In three days, the Sensex has gained 1,250 points, or 1.5 per cent, while the Nifty has also climbed by about 1.5 per cent.
What drove the Indian stock market higher?
Here are the five key factors that appear to have driven the Indian stock market:
1. Optimism over a potential India-US trade deal
Media reports suggest an India-US trade deal could be announced in the next few days, infusing positive sentiment in the domestic market. As per a Mint report, US President Donald Trump said tariffs on India will be lowered “very substantially”, signalling an easing of tensions over New Delhi’s Russian oil purchases as the two countries near a trade deal.
US tariffs on Indian goods have been the main reasons why the Indian stock market has been in a range since June this year. At present, the US levies 50 per cent tariffs on Indian imports.
Experts believe a trade deal will mean tariffs will come down to 15-16 per cent, which will be a major boost for affected sectors, including textiles, gems, jewellery and stock market sentiment.
2. The US government shutdown may end soon
Hopes are high that the US government shutdown, the longest in history, will end soon, as the Senate passed legislation on Monday to reopen the government.
The reopening of the US government will enable the release of government data, providing clarity on the health of the US economy and shaping expectations about the monetary policy of the US Federal Reserve. Markets expect the reopening of the US government will support views for a US Fed rate cut in December.
3. Bihar election 2025 exit polls
As the Bihar Assembly Elections 2025 are over, most exit polls suggest the National Democratic Alliance (NDA) may retain power in Bihar.
While the results are unlikely to have a lingering impact on the Indian market, experts believe assembly election verdicts may give any major setback to the stock markets in the short term if the NDA loses the election.
VK Vijayakumar, chief investment strategist at Geojit Investments Limited, believes a decisive win for the NDA will be a sentiment positive from the market perspective, while a poor show by the NDA will be sentiment negative.
4. Positive macro outlook underpins sentiment
India’s strong growth-inflation dynamics have underpinned market sentiment and been a key factor in shielding the market from a crash despite heavy foreign capital outflows amid US tariffs and global headwinds.
Global brokerage Goldman Sachs reversed its October 2024 downgrade, as it raised its rating for the Indian stock market to “overweight” from “neutral”, citing strengthening earnings momentum and policy tailwinds supporting growth.
5. Stable Q2 earnings
Q2 earnings season is near its end. So far, Indian corporates have reported healthy numbers, without any negative surprises, which is positive for the market. Experts expect earnings to improve further from Q3 onwards, and it appears that the market is discounting it, as on a monthly scale, the Nifty 50 is up since September this year.
According to Arindam Mandal, Head of Global Equities, Marcellus Investment Managers, the worst may be over for the Indian stock market. He said even though the SMID (small and mid-caps) valuations still look a bit stretched, large-cap valuations are back near long-term averages, and earnings revisions seem to have bottomed out.
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Disclaimer: This story is for educational purposes only. 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.
