Bulls retained their strong hold over Dalal Street for the second consecutive session despite weakness in global markets. Benchmark indices gained over 1 percent, but the broader markets underperformed frontliners with the Nifty Midcap 100 index rising 1.14 percent and Smallcap 100 index up 0.6 percent.
The BSE Sensex surged 776 points to 58,461.29 and the Nifty50 climbed above 17,400 mark, rising 235 points to close at 17,401.70.
Here are the five factors that drove the market higher:
Measures to curb the spread of Omicron
India has reported less than 10,000 daily COVID cases for a week now. Experts believe the Omicron news may have been priced in and the market is awaiting further updates with respect to the new variant.
Meanwhile, India tightened and revised its rules to avoid another COVID crisis as the government has asked states to keep a strict vigil on international passengers coming to the country.
Major states such as Maharashtra (Mumbai) and Delhi made RT-PCR tests and seven days of institutional quarantine mandatory for travellers from "at risk countries".
Oil at $70 a barrel
The significant fall in oil prices from $86.7 a barrel levels in October to around $70 a barrel now is one of the supporting factors as any fall in the price of oil is positive for a country like India that imports 80-85 percent of its oil requirement.
The fall in oil prices is largely amid fears that restrictions to curb the new COVID-19 variant could hit demand. Several countries increased travel restrictions to avoid the spread of Omicron. Today, oil prices gained 2 percent to trade around $70 a barrel ahead of a decision by OPEC+ on its supply.
Index Heavyweights and Technology stocks
Housing finance major HDFC was the biggest gainer among Sensex stocks today, up 3.9 percent. HDFC Bank was also on buyers' radar, and closed up 1.4 percent, while Reliance Industries gained 0.7 percent on the BSE.
Technology was the biggest gainer among sectoral indices, rising 2.06 percent, followed by Financial Services, FMCG, and Metal indices, which gained more than 1 percent each. Pharma gained 0.85 percent.
Auto stocks were also in demand after the companies reported monthly sales data. The Nifty Auto index was up 1 percent as Bajaj Auto, M&M, Hero MotoCorp, Maruti Suzuki, Tata Motors and Eicher Motors all gained today. Bosch, Exide Industries, Balkrishna Industries, and Amara Raja Batteries were up 1-2 percent.
Experts believe the commercial vehicle space saw a good performance in November, although the chip shortage hit the passenger vehicle segment.
Emkay Global has retained a positive view on the auto sector, underpinned by expectations of a cyclical upturn in the next three years.
"The uptrend in domestic commercial vehicle volumes continued, but other segments were weak mainly due to supply issues, muted rural sentiment and a high base of last year. Improving chip supplies is expected to aid a sequential improvement in volumes for passenger vehicle and premium motorcycles ahead," said the brokerage.
"The delayed harvest of kharif crops affected rural cash flows and demand. This is expected to be a temporary phenomenon, and cash flows should start improving as soon as the kharif harvest gets fully monetised," the brokerage added.
Technical View and India VIX
The Nifty50 gained more than one percent and formed bullish candle on the daily charts, indicating further uptrend in coming sessions.
"The Nifty has closed around its resistance area of between 17400-17500. If we can trade above this zone for a couple of days, the market can restart its upward trajectory," said Manish Hathiramani, proprietary index trader and technical analyst at Deen Dayal Investments.
India VIX, which measures the expected volatility in the market, fell 7 percent to 18 levels, which is supporting the market.
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