Nifty jumps 1.2%, Sensex 750 points: Easing inflation, positive cues and all that fuelled the rally

The gains in the market were also broad based as all sectors participated in the rally.

The Dalal Street bulls looked mightier as the domestic benchmark indices opened charged up on November 15 and both the BSE Sensex and the NSE Nifty 50 settled over 1 percent higher each. With this, the Nifty 50 also ended above 19,600 for the first time since October 19. The strong gains in the Indian market mirrored the upbeat mood in its global counterparts across the US and Asia.

Some buying from lower levels also contributed to the gains as the benchmarks had succumbed to selling pressure in the previous session amid mixed global cues. Analysts too remain hopeful of seeing a sustained uptrend in the benchmarks, albeit gradually, going ahead.

At close, the Sensex was up 742.06 points or 1.14 percent at 65,675.93, and the Nifty was up 232.00 points or 1.19 percent at 19,675.50.

What's fueling the optimism?

A softer US inflation print: The major factor behind the bullish trend driving global markets has been the softer-than-expected US retail inflation print for October, which sparked hopes that the Federal Reserve may now put a stop to its rate-hike regime. Some pockets within the market were also harbouring hopes that the Fed may also advance its plans to cut interest rates from mid-2024.

Also Read | Wall Street surges on news of cooling US inflation

Retail inflation in the US increased 3.2 percent on year in October, beating an estimated 3.3 percent rise, amid lower gasoline prices, while underlying inflation showed signs of a slowdown.

"The softer October US inflation data is a game-changer for the stock market. The takeaway from these numbers is that the Fed is done with rate hikes and the timeline for rate cuts in 2024 is likely to be advanced. The sharp recovery in US markets will be reflected in India, too," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

"FIIs are likely to turn buyers, lest they miss out on the rally in the best performing large economy in the world. Leading financials which were weighed down by FII selling will bounce back," he added.

Positive global cues: The softer-than-expected inflation print ushered in optimism across equity markets, lifting the S&P 500 and Nasdaq to post their best day since April on November 14.

Not just that, the dollar index also cooled down and so did yields on the benchmark 10-year US treasury bonds, further lifting sentiment.

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Tracking the strong overnight cues from Wall Street, benchmarks across Japan, South Korea, Taiwan, Indonesia, Thailand, and Hong Kong also soared 1-2 percent in today's session.

Domestic inflation at 5-month low: India's headline retail inflation rate moderated to 4.87 percent in October on the back of a favourable base effect and cooling prices of some items. The headline inflation has fallen below the 5-percent mark for the first time since June.

With this, the retail inflation also remained within the Reserve Bank of India's tolerance range of 2-6 percent for a second month in a row.

Broad based gains: The gains in the market were also broad-based as all sectors participated in the rally. All sectoral indices were trading in the green as gainers outnumbered laggards in the market. The strength in the market can also be reflected in the fact that two stocks rose for each one that fell. About 2,199 shares gained, 1,426 lost, and 124 traded unchanged.

Stellar overnight gains in the technology-heavy Nasdaq Composite also aided sentiment for domestic information technology stocks. As a result, Tech Mahindra, Infosys, and Tata Consultancy Services jumped 2-4 percent, thereby pulling the Nifty IT index 2.6 percent higher.

A fall in the dollar index also bode well with metal stocks, triggering an over 4 percent surge in Hindalco Industries. Other metal counters like Tata Steel, JSW Steel and Hindustan Zinc also moved higher, which altogether lifted the Nifty Metal index up around over 1 percent.

Key levels to watch: Aligned with the Nifty 50's uptrend in today's session, Prashanth Tapse, Senior VP (Research), Mehta Equities believes that the technical landscape also hints towards a significant rebound as he projected an upside towards at 19,707 and then 19,857 levels for the headline index.

However, Manish Sonthalia, chief investment officer of Emkay Investment Managers, expect a rangebound trajectory for the market for the time being following the sharp gains in today's session.

Backing the view, Deven Mehata, research analyst at Choice Broking, also sees an immediate resistance lined up for the Nifty at 19,650 and then 19,700 which will trigger bouts of selling pressure in the index's upward trajectory.

The overall bias in the market remains positive and, hence, Mehata suggests investors to hold their long positions with trailing stop loss . Analysts also advice investors to use any dip in the market as an opportunity to add fresh bets on the long side.

Also Read | Goldilocks hopes return to Wall Street after benign inflation report

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