Benchmark indices maintained positive momentum for sixth consecutive session on June 3. Nifty50 finally reclaimed psychological 10,000 mark in its second attempt of rally, rising 82.40 points or 0.83 percent to 10,061.50.
The BSE Sensex also climbed above 34,000 levels, closing 284.01 points or 0.84 percent higher at 34,109.54, but lost more than half of gains in last hour of trade.
The broader markets also came off day's high as the Nifty Midcap index was up 0.4 percent and Smallcap rose 1.2 percent.
Here are five factors lifting the momentum:
Global Rally Continues
Globally equity markets remained strong today as well, despite unrest in the United States over the killing of George Floyd by police. The gradual reopening of economies worldwide after easing lockdown measures continued to boost investors' confidence.
Asian peers also closed strong. Japan's Nikkei, Hong Kong's Hang Seng, Australia's ASX 200 and South Korea's Kospi traded 1-3 percent, while China's Shanghai Composite gained 0.07 percent.
European markets, too, were strong at 16:00 hours IST. France's CAC, Germany's DAX and Britain's FTSE were up 1-2.5 percent.
US markets also closed on a positive note overnight as Dow Jones, Nasdaq Composite and S&P 500 gained 0.6-1 percent.
Momentum on Reopening Economy Stays
The lockdown 5.0 seems to be on expected lines as the government allowed economic activities in all regions excluding the containment zones where the infections rate is still high. Hence the operations of not only essential but also non-essential goods and services started.
The only concern is that companies, industries etc cannot work at full capacity which was on expected lines, because of social distancing rule. Once the virus gets controlled in coming weeks, government will start allowing to increase capacity levels.
The recent announcement of auto sales data, sowing in farms, opening of mandis etc clearly indicated that economic activities began in second half of May.
Banking & Financials Retain Leadership Position
The rally in banking & financials continued for seventh consecutive day today and the fear of losing leadership position seems to have gone away. The Nifty Bank surged 2 percent, while Financial Services index was up nearly 2 percent amid optimism that operational activities began though with less capacity.
The execution of financial package for MSMEs, SMEs, NBFCs etc already started by banks.
The Nifty Bank and Financial Services indices gained around 22 percent and 18 percent in seven consecutive sessions. Stocks like Bajaj Finance, Bajaj Finserv, which hit badly during lockdown period, gained nearly 5 percent today and infact continued momentum from last week.
State Bank of India, which was worried about NPA pressure after financial package announced by the government and lockdown, rose 2.7 percent today.
Earnings and Monsoon
Britannia gained nearly 2 percent and InterGlobe Aviation rose 8.5 percent after in-line quarterly earnings.
The arrival of monsoon well before time buoyed investors sentiment as production could be strong this year as well from agriculture activities, which contributes around 17-18 percent to GDP.
The Nifty50 lost more than half of gains in last hour of trade and closed off day's high. The index formed bearish candle on daily charts as closing was lower than opening levels, indicating that the market may be at overbought levels.
It was on expected lines given the consistent rally seen from last week, but the sentiment remains positive and after a break if it happens, the index may resume its uptrend again towards 10,200-10,300 levels, experts feel.
"A sustainable move beyond 10,000 would unfold the rally towards 10,200 or beyond. The recent rally is propelled by the banking space, which is a sign of strength and genuineness. Apart from this, other pockets too have contributed on this occasion along with the broader market," Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking told Moneycontrol."Hence, one should concentrate more on individual stocks because we might see some slowness or consolidation in indices going ahead," he said.