The Indian stock market benchmarks – the Sensex and the Nifty 50 – clocked healthy gains of nearly 1% in intraday deals on Monday, 5 October, tracking largely positive global cues.
The Sensex rose more than 600 points, or nearly 1%, to an intraday high of 72,540, while the NSE counterpart also climbed by nearly 1% to the day’s high of 22,602.
The rally was broad-based as the mid and small-cap indices on the BSE – BSE 150 Midcap Index and BSE 250 Smallcap Index – also rose by nearly 1% during the session.
The overall market capitalisation of BSE-listed firms jumped to nearly ₹470 lakh crore from ₹467 lakh crore in the previous session, making investors richer by about ₹3 lakh crore in a day.
Why is the stock market up today?
Here are three key factors behind the rise in the domestic stock market today:
1. Short covering after sharp losses
The market is witnessing short covering after the recent heavy selloff. The Sensex and the Nifty 50 extended their losing streak for the eighth consecutive week for the week ended 1 October, marking their biggest such streak in 25 years.
While the US-Iran conflict remains a key headwind for the market, fresh diplomatic efforts appear to be influencing sentiment.
The US recently put forward proposals through a mediator, Iran’s parliament speaker, Mohammad Bagher Qalibaf, told an open session of Parliament, without details.
2. Oil prices ease
A decline in oil prices also supported market sentiment. International crude benchmark Brent crude declined nearly 1% to trade near $101 per barrel on Monday morning amid rising crude exports from the Middle East. Moreover, the release of oil stocks by the Group of Seven nations also boosted supplies, according to Reuters.
Oil’s weakness supported the indian rupee also, which rose by 5 paise to 96.20 against the US dollar in early trade.
3. Bank, IT lead from the front
Healthy Q2 business updates and the appointment of HDFC Bank CEO augured well for banking stocks, while Accenture’s fourth-quarter results infused positive sentiment for the IT sector, overall boosting market sentiment.
Bank Nifty jumped by 1.4%, while the Nifty IT index jumped by 1.56% during morning trade.
“After eight weeks of declines, the market appears set for a rebound in the near-term. The better-than-expected results of Accenture and the appointment of Anup Bagchi as MD and CEO of HDFC Bank have the potential to lead a turnaround in the market,” V K Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.
“Even though the headwinds coming from elevated crude prices, high US bond yields and sustained FII selling remain, the market is unlikely to be dragged down further since the valuations have tuned attractive, particularly for large-caps. There are strong tailwinds, too. The September auto sales numbers are good, indicating a structurally resilient economy. The RBI is most likely to raise rates by 25bp on 7th October. The market has already largely discounted this. Banks will benefit from the rate hike since rising floating rates will improve their margins,” said Vijayakumar.
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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.
