Christmas is still 25 days away, but it seems that it is arriving early for India's stock market investors. After already hitting all-time highs multiple times this year, the most recent being in September, India's stock market is again surging and inching towards the record mark.
Both Sensex and Nifty had jumped over 1% on November 29 to inch towards a record high mark, with the market capitalisation of all BSE-listed stocks crossing the $ 4 trillion milestone for the first time in history yesterday.
While Sensex ended 728 points higher at 66,902, Nifty advanced 207 points to end at 20,096 yesterday. Even today, after a rocky start on a day when Tata Technologies made a bumper debut on the stock market, Sensex ended the day 0.1% higher at 66,969.52, whereas Nifty ended 0.19% higher at 20,134 today.
On September 15th 2023,??Sensex touched an all-time high of?67927.23, whereas Nifty50?hit the record mark of 20222.45 the same day.
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Here are the key factors that have triggered the recent rally in India's stock market:
1) Positive indications from US Central Bank
US central bank Fed's board of governor member Christopher Waller recently flagged the possibility of lowering the interest rate in the months ahead if inflation continues to come down. Traders are now pricing in a more than 70% chance of rates easing in May, compared with a 50% chance on Tuesday, CME's FedWatch Tool shows, as per ET.
2) Foreign investors back to buying spree
Foreign investors, who were on a selling spree in the last two months, have now turned into net buyers of Indian stocks. Tuesday's data shows that FIIs bought Indian shares worth Rs 784 crore. So far in the month, net FII buying stands at Rs 2,901 crore, according to NSDL data.
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3) Bluechips showing signs of uptick
Bluechip stocks, which have been under selling pressure in the last few weeks amid investor preference for smaller stocks, are now showing signs of an uptick. Wednesday's rally was supported by both Nifty Bank and Nifty IT indices, which rallied 1.5% each. Axis Bank ended 3.7% higher while HDFC Bank also moved up 2%.
4) Global markets' role
Asian shares mostly fell on Wednesday although a strong report on US consumer confidence and hopes the Federal Reserve is finished with its aggressive interest rate hikes sent shares higher on Wall Street.
Japan's benchmark Nikkei 225 declined 0.3%. Hong Kong's Hang Seng dropped 2.4%, while the Shanghai Composite fell 0.5%. Meanwhile, European stocks edged up 0.1% in early trading, with Frankfurt shares leading gains after the German data.
5) Crude oil edging higher
Oil edged higher on Wednesday as investors turned cautious ahead of a crucial OPEC+ meeting to decide output policy in the coming months, while a supply disruption caused by a storm in the Black Sea provided a lift for prices.
Brent crude futures climbed 76 cents to $82.23 a barrel at 3.42 pm. US West Texas Intermediate (WTI) crude futures gained 73 cents, or 0.93%, at $77.11 a barrel. However, both benchmarks have fallen by more than 16% in the last two months.
6) Bond yields going down
Treasury yields hit multi-month lows on Wednesday after a US Federal Reserve official made fresh hints of interest rate cuts. As per the report, the two-year yield hit its lowest since mid-July at 4.69% and the benchmark 10-year yield fell 6 bps to its lowest since September at 4.28%.
7) Dollar Index Rising
The dollar index, which tracks the US Dollar's movement against the world's six major currencies, rose 0.12% to 102.87 on Wednesday, although it has declined 3.7% in the past month. The dollar index falling below 103 is positive for equity markets.
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