Biggest rally in five months: Sensex rockets nearly 2k pts, Rs 7.58 trillion gained in broad-based buying as market shrugs off Adani fears, bets on BJP win

The mid-cap and small-cap indices mirrored robust overall trendings, rising 1.1 percent and 0.8 percent, respectively.

After seven weeks of correction, bulls roared back to life, delivering a stunning rebound and shrugging off fears, including Gautam Adani's bribery case, which rattled investors on November 21. Benchmark indices surged, with the Sensex gaining nearly 2,000 points and the Nifty rising over 550 points, marking their biggest single-day rally in five months as renewed buying swept across all sectors, fuelling the dramatic turnaround.

Market experts said the Adani bribery case weighed on sentiment yesterday, preventing the market from discounting a probable BJP-led Mahayuti win in the Maharashtra Assembly Election, as exit polls indicate. Today’s rebound suggests the market has moved past the Adani issues and is looking ahead, said traders.

While uncertainty over the Russia-Ukraine conflict and relentless FII sell-offs continues to loom, traders believe decisive triggers could shape the market's trajectory. In the near term, the Maharashtra election results are expected to play a pivotal role in steering sentiment, with the market seemingly pricing in a BJP win.

The ruling Mahayuti is projected to retain power in Maharashtra with at least five exit polls predicting a majority for the BJP-led alliance while two have predicted a closer fight with the possibility of a hung Assembly. A poll of polls as per the projections available so far predict 151 seats for the Mahayuti, 129 seats for the Maha Vikas Aghadi and 8 seats for Others. The results for the 288 seats will be announced on November 23.

At close, the Sensex was up 1,961.32 points or 2.54 percent at 79,117.11, and the Nifty was up 557.40 points or 2.39 percent at 23,907.30. About 2,333 shares advanced, 1,430 shares declined, and 113 shares unchanged.

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"While it is a strong bounce-back, at the end of the day, it’s a single-day recovery, and that’s not an indication that the markets are on course for a recovery," said Ajit Mishra, Senior Vice President of Religare Broking, in a conversation with Moneycontrol. "Given that we have breached the 200 DMA, we could see another bounce-back, but FII selling and its intensity are factors investors need to monitor closely," he added.

During the afternoon, all 13 sectors rallied, with PSU Bank, Realty, Infra, and IT being the brightest sparks in trade, posting gains of up to 3 percent. Public sector lenders, which took a beating yesterday due to fears of exposure to the Adani Group, rebounded after clarity emerged on their limited risk.

Also read: Sebi investigating whether Adani flouted disclosure rules: Bloomberg

The IT index surged nearly 3 percent, extending its impressive 28 percent rally since the start of the year. Boosting sentiment was favourable US labour market data, which revealed a drop in jobless claims by 6,000 to a seasonally adjusted 213,000 for the week ending November 16—a seven-month low. The data indicates a potential rebound in US job growth for November, following last month's slowdown caused by hurricanes and strikes.

Other gainers include Nifty Bank, FMCG, Pharma, and Healthcare also jumped in trade today, rallying just shy of 2 percent each.

Index heavyweights like Reliance Industries notched up 3 percent in trade, buoyed by international brokerages Morgan Stanley and JPMorgan reaffirming their bullishness on the diversified conglomerate with 'overweight' ratings. According to JPMorgan, one of two drivers of Reliance Industries' recent underperformance—weak refining margins—has started to reverse. The other driver, lower retail sales growth, remains under scrutiny.
Read more: Mutual funds take a hit but still 80% of equity funds fare better than the benchmarks

India's largest public sector lender State Bank of India soared over 4 percent after Jefferies reiterated its "buy" rating with a target price of Rs 1,030. This suggests a potential 29 percent upside from current levels. The brokerage identified SBI as its top sector pick, emphasising the scope for improvement in the loan-to-deposit ratio (LDR) as deposit mobilisation gains momentum.

Fintech player Paytm was buzzing in trade, rising almost 6 percent in the afternoon and extending gains for a fifth trading session, after Bernstein recently dished out a positive call on the fintech player. The international brokerage reaffirmed its bullishness on Paytm as the narrative for the beleaguered fintech player changes from survival to optimism.

In a remarkable reversal, most of the Adani Group stocks turned positive and climbed as much as 3-4 percent after the previous day’s massive sell-off triggered by bribery charges in the US against Gautam Adani.

In the broader market, mid-cap and small-cap indices mirrored robust overall trendings, rising 1.3 percent and 0.9 percent, respectively. "We need to be extra careful with microcap stocks due to high volatility in the space," said Gaurang Shah, Head of Investment Strategy at Geojit Financial Services. "For small and midcap stocks, investors are advised to adopt a stock-specific approach," he added.

"While there are questions about sustainability, it is clear that until we see a decisive break of the zone at 23,800-24,000, any pullbacks should be seen as opportunities to exit long positions. Given the current circumstances, 23,200-23,100 is likely to be tested during this comparable period. Therefore, a strong risk management strategy is recommended to address the current situation," Sameet Chavan, Head of Technical and Derivative Research at Angel One, said.

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