Bulls remained in control of the D-Street from the word go on September 28 tracking positive global and local factors. The S&P BSE Sensex rallied more than 500 points while the Nifty50 reclaimed 11,200 levels.
At 12:30 hrs, the S&P BSE Sensex was trading 505 points higher at 37,889 while the Nifty50 was up 154 points to trade above 11,200 levels.
Sectorally, the action was seen in the public sector, power, auto, banks, and oil & gas, while some profit-taking as visible in the IT space.
Here are four factors which could be fuelling the rally on D-Street –
Positive Global Cues
D-Street witnessed a volatile expiry week where benchmark indices fell by about 4 percent, but there were no Monday blues. Most of the Asian markets were trading in the green.
Chinese stocks drove Asian markets higher as data over the weekend showed profits at China’s industrial firms grew for the fourth straight month in August buoyed in part by a rebound in commodities prices and equipment manufacturing, said a Reuters report.
On Friday, Technology stocks lifted the main US indexes by more than 1 percent. The Nasdaq closed higher for the week after falling the previous three and is now up 22 percent for the year. The S&P 500 is up a bit more than 2 percent for the year, the report added.
Public sector banking stocks led the charge on D-Street after media reports suggested that the Finance Ministry is likely to provide capital support from the Rs 20,000 crore fund approved by Parliament in the recently concluded session to some Public Sector Banks (PSBs) in the third quarter itself.
Parliament approved Rs 20,000 crore for PSB capital infusion as part of the first batch of Supplementary Demands for Grants for 2020-21 which sought additional spending of a record Rs 2.35 lakh crore primarily to meet expenses for combating the COVID-19 pandemic, said a PTI report.
Fiscal Support Measures
Market sentiment remained upbeat tracking news of a possible stimulus package from the government.
The Narendra Modi government is just weeks away from announcing another round of stimulus measures aimed at creating jobs and pushing demand, as it looks to turn around India’s ailing economy which saw its steepest ever contraction in April-June.
These plans could involve a bigger direct fiscal outlay compared to the previous two packages - the PM Garib Kalyan package and the Aatmanirbhar Bharat package - and may include a Rs 35,000 crore urban jobs scheme, a massive infrastructure initiative with an emphasis on 20-25 big projects which can be completed this year, and continuing focus on the rural job and farm schemes and free food and cash transfers.
"The stimulus is expected after a steepest ever decline in GDP contraction in Apr-Jun period, but the positive rub-off effect of the stimulus on markets would not last for more than a week. The US elections, scheduled for November 3, 2020, will keep global markets volatile, to say the least," Arjun Yash Mahajan, Head – Institutional Business at Reliance Securities told Moneycontrol.
A close above 11,000 on Friday suggested that bulls are not ready to give up that easy as they put up a strong fight near 10,800 levels. The Nifty50 hit an intraday low of 10,790 last week on September 24 before bouncing back.
"Investors may have a positive outlook as it is very likely that Nifty will hold the above 10,600 and can retest 115,00 on the upside," Gaurav Garg, Head of Research at CapitalVia Global Research Ltd told Moneycontrol.
"The level of 10,800 is a crucial level on the downside and a breach of which could be used by investors to buy at lower levels," he said.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.