Sensex jumps nearly 700 pts, Nifty above 23,400: Easing foreign selling among key factors behind market gain for 5th day

Sensex jumps 500 pts, Nifty above 23,300: Easing foreign selling among key factors behind market gain for 5th day

Benchmark indices Sensex and Nifty rose for fifth straight day on March 21 as stronger rupee and recovery in IT shares led to the rally. Fresh foreign fund inflows also supported the investors' sentiments today.

Sensex jumped 557.45 points or 0.73 percent to settle at 76,905.51. During the day, it surged 693.88 points or 0.90 percent to 77,041.94. The NSE Nifty climbed 159.75 points or 0.69 per cent to 23,350.40.

The domestic markets posted biggest weekly gain in four years. On February 7, 2021, the domestic markets moved 9.46 percent.

Bajaj Finance, Nestle, Kotak Mahindra Bank, NTPC, Maruti, Power Grid, Adani Ports, Tata Motors, Reliance Industries and Bajaj Finserv were among the gainers.

Here are the key factors behind the market rally:

1) Stronger rupee: Indian rupee opened 14 paise up on March 21 due to support from strong foreign investors flows and fall in real effective exchange rate (REER), currency experts said. The local currency opened at 86.2287 against the US dollar, and then traded at 86.2337 against the US dollar, as compared to previous close of 86.3675 against the greenback, a two-month high. This is the best weekly gain for the rupee in over 2 years.

2) Easing foreign selling: Foreign portfolio investors (FPIs), who have been persistent sellers of Indian equities since late last year, turned buyers in two of the last four sessions, per provisional data. FIIs/FPIs turned net buyers again on March 20, purchasing shares worth Rs 3,239.14 crore while domestic institutional investors (DII) were net sellers of shares worth Rs 3,136.02 crore, provisional data showed.

"The rally in the market this week which saw the Nifty rise by 3.5 per cent has come at a time when trade tensions are escalating and more is expected when the reciprocal tariffs kick in on April 2. The main driver of the rally is the buying by FIIs in the cash market in two days," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

3) Value buying: Attractive valuations in large-cap stocks led to the market rally in last five days, said an analyst.

"Currently, we are witnessing a relief or pull-back rally that could last up to 23,300-23,500 levels, with large-caps trading at attractive valuations," Shrikant Chouhan, head of equity research at Kotak Securities told Reuters.

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