Indian stock markets posted strong gains in Thursday's trading session, which was also the last trading session of the week, month and financial year. Sensex rose 900 points and Nifty50 crossed 22,400 points.
The market capitalization of all stocks listed on the BSE increased from Rs 2.74 lakh crore to Rs 386.38 lakh crore.
In the process, the benchmark index rose 2% in the month and up to 29% in the 2023-24 fiscal year.
Turning to today's action, analysts attribute today's rally to strong domestic inflows combined with short covering by foreign investors. DII is said to have been a net buyer of shares worth Rs 24,700 crore in the last seven trading sessions.
Here are the key factors behind today's Sensex rally:
Strong clues from the US market
Wall Street stocks closed higher overnight ahead of key inflation numbers later this week. The Dow Jones Industrial Average rose 1.22%, the S&P 500 Index rose 0.86%, and the Nasdaq Composite Index rose 0.51%.
Asian stock markets were mixed on Thursday. The Chinese stock market recovered the losses of the previous day. Hong Kong's Hang Seng Index rose 1.1% to 16,579.99, while the Shanghai Composite Index rose 1.2% to 3,029.01. Australia's S&P/ASX 200 index rose 0.9% to 7,887.00. Taiwan's Taiex remains virtually unchanged. Tokyo's Nikkei 225 index closed down 1.2% at 40,283.44.
Large-cap stocks attracting attention
Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, believes there is a strong trend towards large caps. Beyond that, expectations of a sluggish market move through the end of the financial year proved wrong, sparking a strong short-term sell-off today.
Beyond that, given fears of further regulatory action on SmallCaps following the MF stress test results which showed select funds could take up to 30 days to liquidate 25% of their holdings, this has weighed on sentiment towards large caps. It's kind of helpful. Counter, Vijayakumar added.
In today's trade, HDFC Bank and ICICI Bank gained over 200 points in the BSE Sensex. Larsen & Toubro, Infosys and SBI together contributed an additional 200 points.
Banking and financial sector interests
Financials rose after the central bank eased recently tightened rules on lenders' investments in alternative investment funds (AIFs).
The Reserve Bank of India (RBI) on Wednesday relaxed norms introduced in December to mandate lenders set aside higher provisions if they buy alternative investment funds and then invest in the lender's borrowers.
Heavyweights Bajaj Finance and Bajaj Finserv rose about 4% each after it was reported that its housing finance arm Bajaj Housing Finance has started preliminary talks with several investment banks for a potential initial public offering. ICICI Bank and State Bank of India added 1.6% and 1.9% respectively to round out the top 10 of the Nifty 50.
cool technology
After 10 trading sessions, Nifty 50 has bounced above the 20-DMA (Daily Moving Average), a short-term trend indicator. Additionally, major momentum oscillators also showed positive divergence on the daily charts. This therefore suggests that the short-term bias is likely to remain favorable as long as the index remains above the 20-DMA at the 22,180 level.
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