After last week’s consolidation, the stock market finally gained strength and the benchmark indices rose about 1 percent, with the broader sectors also showing an uptrend on March 30.
The BSE Sensex surged 740 points to 58,683 and the Nifty 50 was up 173 points at 17,498 at close. The Nifty Midcap 100 and Smallcap 100 indices also traded in line with frontliners, rising 0.85 percent and 1 percent, respectively.
“The upside to the rally is likely to be capped by profit-taking and concerns arising from the hawkish Fed,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Five factors driving the market higher:
1) Ukraine-Russia peace talks
The market is riding on hopes of a breakthrough in peace talks between officials of Ukraine and Russia in Turkey, which played a role of a neutral mediator.
Moscow agreed to cut its military assault on Kyiv and Chernihiv, while Ukrainian negotiators proposed adopting a neutral status in exchange for security guarantees. On Moscow’s comments, the Pentagon cautioned that it's not a retreat. Russia previously did not follow through on similar pledges. (CNBC reported)
2) Asian markets gain
Asian counterparts were largely positive, with China’s Shanghai Composite rising almost 2 percent and Hong Kong’s Hang Seng climbing 1.4 percent following the overnight rally on Wall Street. Australia’s ASX 200 was up 0.67 percent and South Korea’s Kospi gained 0.2 percent.
The Dow Jones Industrial Average and S&P 500 indices gained 1 percent each on March 29, while the Nasdaq Composite climbed 1.8 percent even after 5-year and 30-year bond yields inverted for the first time since 2016.
3) FII outflow slows downForeign institutional investors seem to have slowed down their selloff over the past couple of weeks as they intermittently started buying equities. However, they still remained net sellers to the tune of Rs 47,727 crore in March, the highest monthly outflow since March 2020.
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4) Sectors in actionAll major sectors, barring metals and pharma, participated in the run up. The Nifty Bank, Auto and Financial Services indices gained 1-2 percent.
“The prospects for financials - leading banks, leading housing finance companies, the fintech leader and select NBFCs - appear bright for FY23 and their valuations are fair,” said Vijayakumar of Geojit.
5) India VIXVolatility cooled off further on March 30, falling below the crucial 20 levels intraday, which supported the bulls. Experts said a further fall in volatility could bring more stability to the market.
India VIX, the fear index, traded at 20.61, down 3.25 percent, at the time of publishing.
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