As markets rise for fifth session, a look at the factors driving the sentiment

Stock Market Today:

Indian markets on March 14 surged for the fifth consecutive session as sectors such as banking and information technology drove sentiment.

The S&P BSE Sensex gained 0.92% to 56,059.62 on Monday and the NSE Nifty 50 Index rose 0.68% to 16,743 points. In the last five sessions, both Sensex and Nifty advanced 5.6% and 5.1% respectively.

Sentiment got a boost after the ruling Bharatiya Janata Party retained the politically important state of Uttar Pradesh and three other states.

Here are a few reasons why markets are gaining for the fifth session:

RBI seen as supporting growth: Reserve Bank of India may review its forecast for growth and inflation at its next policy meeting on 8 April, deputy governor Michael Patra said on Friday, as the global economy feels the ripples of Russia's invasion of Ukraine. "International crude prices present an overwhelming risk" to inflation, Patra said, adding that any spike in prices would still be treated as a supply shock at this stage, in a clear signal that monetary policy will continue to support growth. 

CPI, WPI data: The government will publish the consumer price index for February after 5:30 pm today. Inflation is expected to be high, and will be treated as being caused by supply shock, and as a result RBI will continue to support growth. According to a Bloomberg survey, CPI probably increased 6% in February year on year, at the higher end of RBI's tolerance bond. Wholesale price index will be announced after 12 pm for February. Bloomberg expects WPI at 12.1% in February versus 12.96% a month ago.

Key global central banks: Investors will also watch out for key global central banks that will release monetary policy later this week. The US Fed will announce its decision on Wednesday. The Bank of England meets on Thursday and Bank of Japan on Friday.

Election win: BJP performed well in recent elections with the party winning four of the five states. "In our view, the favourable outcome of state elections will encourage the government to continue with its strategy of governance and economic reforms. However, the results will not materially boost BJP’s strength in the Rajya Sabha, as gains in Uttar Pradesh will be offset by losses in Andhra Pradesh and Rajasthan," said Kotak Institutional Equities in a report.

Recent correction: According to analysts, the recent sharp correction in the market has made valuations more palatable. Also, the impact of higher crude prices on earnings for consumer-facing stocks may not be too harsh and their lower contribution to aggregate earnings may be compensated by higher earnings in global commodities and IT if crude oil prices remain around current levels for a limited period. "We find reasonable reward/risk balance in some sectors such as  banks and diversified financials, capital goods, real estate and speciality chemicals, while valuations of most ‘growth’ stocks remain rich," Kotak Institutional Equities said.

(Bloomberg contributed to this story)