After a few days of consolidation, the markets regained momentum and reported a blockbuster rally, with the benchmark indices trading at fresh highs, with one-and-a-half-percent gains on September 23.
The BSE Sensex has gradually been marching towards the much-awaited 60,000 mark, rising 958.03 points, or 1.63 percent, to 59,885.36, while the Nifty50 surged 276.30 points, or 1.57 percent, to 17,823 at close.
Here are five key factors behind the rally:
The rally in global markets could be one of the reasons that lifted sentiments in the Indian equity benchmarks. European markets, including France's CAC and Germany's DAX, gained more than 1 percent, while Britain's FTSE rose half a percent after the Federal Reserve retained benchmark interest rates unchanged and indicated that there is no imminent rollback of monetary stimulus.
European markets followed the rally in Dow Jones futures, which gained around a percent.
The Federal Reserve indicated on Wednesday that it doesn't see an imminent rollback of the monetary stimulus that has been supporting the economy throughout the pandemic. “If progress continues broadly as expected, the committee judges that a moderation in the pace of asset purchases may soon be warranted,” a statement from the Fed read. No timeline was given, however, reports CNBC.
Evergrande issue eases
China's Evergrande issue eased with the injection of cash by the Chinese central bank into the banking system and calmed investors' nervousness that spooked markets a couple of days back.
Evergrande agreed to settle interest payments on a domestic bond on Wednesday, while the Chinese central bank injected 90 billion yuan into the banking system, temporarily soothing fears of an imminent contagion from the debt-laden property developer.
Evergrande’s main unit, Hengda Real Estate Group, said on Wednesday it had “resolved” one coupon payment due on Thursday on its Shenzhen-traded 5.8% September 2025 bond, via “private negotiations”, reports Reuters.
Rally across sectors
All sectoral indices participated in the rally, with the Nifty Realty index gaining the most, with an 8.6 percent rally, amidst the huge buying demand, likely ahead of the festive season and after a reduction in interest rates by several banks on home loans.
The Nifty Bank and Nifty Financial Services gained more than 2 percent, while auto and IT indices rose more than one percent, and the metal index jumped 1.8 percent.
Controlled Covid cases, with the increased pace of vaccination across the country and a slew of reforms and measures by the government, clearly lifted sentiments, said experts.
“Buoyed by positive tailwinds, like the progress of the monsoon and pace of vaccinations, the bulls upped the ante today in style as the Sensex inched closer towards the 60,000-mark. The slew of reforms undertaken during the pandemic has now started yielding results and most of the sectoral indices, barring the media index, were up today. Mortgage and real estate names were seen buzzing around on incremental positive news flow," said S Ranganathan, Head of Research, LKP Securities.
Broader market participation
The broader markets continued to gain, with the Nifty Midcap 100 index rising 1.5 percent and the Smallcap 100 index 0.84 percent. Both had rallied around 1.5 percent each in previous sessions.
The Nifty50 rallied over 1.5 percent and formed a bullish candle on the daily charts as the closing was higher than the opening levels, indicating the gradual march towards the 18,000-mark now.
“The market witnessed some positive movements after it was able to sustain the Nifty50 Index level of 17,500. Research shows it sustaining above 17,850, and the market is expected to gain momentum, leading to an upside projection till the 18,000 level. Momentum indicators like RSI and MACD are likely to stay positive and the market breadth will improve, further strengthening a short-term bullish outlook," said Ashis Biswas, Head of Technical Research, CapitalVia Global Research.