Sensex jumps 1,300 points, Nifty above 24,300 as Maharashtra Election spurs rally; PSU stocks rally

Shriram Finance, BPCL, Bharat Electronics, BPCL, L&T, and M&M were the top gainers on the Nifty.

Benchmark indices Nifty and Sensex opened on a strong note on November 25, basking in the glow of the BJP-led Mahayuti Alliance’s sweeping victory in Maharashtra. Buoyed by upbeat cues from Asian and US markets and a welcome slowdown in foreign outflows, the rally carried the momentum into a second consecutive session, inducing broad-based buying across the bourses.

At about 9:30 am, the Sensex was up 1,323.37 points or 1.67 percent at 80,440.48, and the Nifty was up 408.20 points or 1.71 percent at 24,315.50. About 2635 shares advanced, 411 shares declined, and 106 shares unchanged.

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"The Maharashtra election results have lifted market sentiment, supported by easing FII selling and robust liquidity," said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities. He emphasized that investors should closely monitor the extent of foreign outflows, which are likely to taper as the FIIs enter the December holiday period. "If FIIs turn net buyers, we could witness a strong rally," he added.

On Friday, FIIs sold Rs 1,278 crore in cash markets, the lowest since the start of the month and significantly lower than the previous day when they sold over Rs 5,000 crore. During the last session, markets rallied over 2 percent, posting their biggest single-day gain in five months.

Also read: MSCI November Rejig: Indian equities to see $2.5 billion in inflows, spotlight on HDFC Bank

The PSU Bank, Realty, and Auto index led the market rally in early trade, surging up to 4 percent. Stocks like SBI, Bank of Baroda, PNB, and Canaraback lifted the index higher. Kranthi Bathini of WealthMills Securities attributed the buying interest in banking stocks to their attractive long-term relative valuations. Auto majors like M&M, Maruti Suzuki, and Tata Motors powered the gains. Adding to the upbeat mood, India VIX, the market’s fear gauge, edged lower to hover just above the 16 mark.

Reliance Industries led the gainers in the opening trade. Shares jumped nearly 3 percent to Rs 1,299 in early trade after Citi highlighted a favourable risk-reward scenario. The brokerage expects refining margins to improve due to reduced competition from Chinese exports. It also sees Jio benefiting from potential tariff hikes, better data pricing, and 5G monetization.

Food delivery major Zomato rose 6 percent in morning trade after receiving approval from its shareholders to raise up to Rs 8,500 crore via Qualified Institutions Placement (QIP). Meanwhile, Zomato will replace JSW Steel in the BSE Sensex, effective from December 23.

Read more: Maharashtra Election win to boost market sentiment in the near-term, govt spending will be key to growth, state fiscal concerns persist

Cochin Shipyard also rallied 4 percent after the company entered into a Memorandum of Understanding (MOU) with Seatrium Letourneau USA, Inc. for the design and supply of critical equipment for jack-up rigs for the Indian market. This partnership aims to capitalize on opportunities for mobile offshore drilling units (MODUs) designed to meet the needs of the Indian market.

The broader market, comprising mid-small cap indices, also mirrored robust overall trends with gains of 1.6 percent, each. Domestic brokerage Motilal Oswal suggests that rcent market corrections, driven by weak earnings, foreign outflows of $14 billion since October, and geopolitical risks, have left large-cap valuations relatively attractive. Yet, midcaps and small-caps remain expensive. The broader market has rallied up to 19 percent since the beginning of the year, sharply outpacing Nifty's 9 percent growth during the same duration.

Despite potential near-term gains, sustainability depends on foreign investor activity, influenced by geopolitical developments and U.S. treasury yields. "Even as we see a bounce back, volatility will likely remain high as we wait for more clarity on geo-political tensions between Russia and Ukraine and Trump assuming office," says Sanjeev Hota of Sharekhan by BNP Paribas in a conversation with Moneycontrol.

"To maintain its positive momentum, the index needs to stay above the 23,200-23,300 range, which is crucial for a potential recovery. The Sensex, after holding steady near its important 200-day moving average of 77,500, has shown a strong rebound, improving market sentiment and closing above the 79,100 mark," says Vaishali Parekhi, Senior Vice President of Technical Research at Prabhudas Lilladher. "The next key challenge for the Sensex is to cross the 80,200 level, which could pave the way for further gains. For the week, support levels are set at 77,300 for the Sensex and 23,300 for the index, while resistance is expected at 81,000 and 24,500, respectively," she added.

Shriram Finance, BPCL, Bharat Electronics, BPCL, L&T, and M&M were the top gainers on the Nifty. There were just 2 losers on the index -- JSW Steel and Infosys.

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