The equity benchmark indices advanced to fresh highs on Thursday, rising by around 1 percent amid optimism over a possible India-US trade agreement, continued foreign fund inflows, and strong buying in IT shares.
At around 10:10 a.m. the Sensex jumped 797.51 points or 0.94 percent to 85,223.85, while the Nifty climbed to 26,088.90, up 220.30 points or 0.85 percent.
Infosys, HCL Technologies, Axis Bank, Tech Mahindra and Tata Steel were among the major gainers in the Nifty pack, rising up to 4 percent. About1,871 shares advanced, 1,413 declined, and 182 remained unchanged.
Key factors behind the market rally
1) India-US trade deal hopes: Investor sentiment remained upbeat on reports that India and the US were narrowing their differences over trade terms, with both sides working towards an agreement that could lower tariffs to around 15-16 percent, according to a report in Mint. US President Donald Trump said Prime Minister Narendra Modi had assured him during a phone conversation earlier this week that India would reduce purchases of Russian oil.
"Reports of an imminent trade deal between India and the US are doing the rounds in market circles, and the market reaction through Nifty implied open confirms this," said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
He added that the expected deal, which may involve concessions from both sides, could be a significant positive for the Indian economy and a major boost for equities. "If the reported 15–16 percent tariffs on Indian exports to the US materialise, the rally seen during the festive season could gather further momentum," he said.
The optimism around India-U.S. trade deal is also boosting markets, said Devarsh Vakil, head of prime research at HDFC Securities. "The trade deal could give Indian textile exporters a competitive edge over peers in Vietnam and Bangladesh, who face higher tariffs," said ICICI Direct Research.
2) FII inflows: Foreign institutional investors (FIIs) remained net buyers for the fifth consecutive session on October 21, purchasing shares worth Rs 96.72 crore during the special one-hour Diwali trading session.
"A decisive breakout above 26,000-26,300 could lead to fresh lifetime highs for Nifty as the broader sentiment remains positive, supported by robust quarterly results so far, festive liquidity and steady foreign flows," R Ponmudi, chief executive officer at Enrich Money told Reuters. "Foreign institutional investors have bought Indian shares for five straight sessions," he added.
3) Buying in IT shares: IT counters led the gains, with the Nifty IT index rising 2.4 per cent after the US administration clarified that recent international graduates already in the country on H-1B sponsorship would not be subject to the new $100,000 visa fee announced last month. Officials also confirmed that existing H-1B holders would be exempt from the levy.
4) Rupee strengthens: The rupee appreciated 13 paise to 87.80 against the US dollar in early trade, supported by upbeat domestic equity sentiment and hopes of a trade deal. Forex dealers said foreign fund inflows and improved risk appetite also aided the local currency.
Technical view
"Nifty’s high momentum, as confirmed by oscillators, has kept it trading close to the upper Bollinger band on consecutive days," said Anand James, Chief Market Strategist at Geojit Financial Services.
"In this setup, bearish candles formed over the last two sessions may initially be ignored before any sharp reversal sets in. The immediate upside target is seen at 26,186, with 26,800 as an optimistic objective. The downside marker stands at 25,780, though an outright reversal is unlikely today," he added.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
