Benchmark indices Sensex and Nifty snapped their three-day losses on November 26 by rising over 1.2% each amid broad-based buying and positive global cues.
Sensex closed 1,022.50 points or 1.21% higher at 85,609.51, and the Nifty climbed 320.50 points or 1.24 percent at 26,205.30. About 2,705 shares advanced, 1,303 shares declined, and 142 shares were unchanged. This was the biggest single-day rise in five months.
Here are key factors behind market rise:
Fed rate cut optimism
Amid rising expectations of an imminent Federal Reserve rate cut, Indian benchmarks were trading higher, tracking Asian peers, with information technology and metal shares leading the gains.
All 16 major sectors advanced on November 26. The broader small-caps and mid-caps rose over 1.2% each.
Other Asian markets rose 1%, tracking an uptick in Wall Street equities after data showed US retail sales rose less than expected and consumer confidence weakened, bolstering expectations of a Fed rate cut in December.
Comments from two Fed policymakers favouring a December rate cut also aided sentiment.
Lower interest rates in the US make emerging markets such as India more attractive for foreign investors.
IT companies, which earn a major share of their revenue from the US, rose 0.8%. Metals gained 1.7% as U.S. rate cut hopes aided demand outlook.
"Global sentiment remains constructive, supported by expectations of a December U.S. rate cut, keeping the overall tone optimistic," said Hitesh Tailor, research analyst at Choice Broking.
Rate cut expectations also rose because a Bloomberg report said Kevin Hassett, who is currently the White House National Economic Council Director, was being considered as the next Fed chairperson.
Domestic rate-sensitive sectors such as financials, banks, PSU lenders, auto, consumer and realty gained between 0.5% and 1%, on expectations of a domestic rate cut next week after the central bank governor signalled scope for further rate reduction.
FII buying
FII buying was witnessed on November 25, which could have contributed to the bullish sentiment.
"Yesterday’s 74 point fall in Nifty despite the positive institutional buy figure of Rs 4,697 crore is a case of expiry-related volatility. The relevant question is: what should investors do during such indecisive movements in the market. The best strategy for retail investors is to refrain from trading and slowly accumulate fairy-valued high quality growth stocks which will be available at attractive valuations due to heightened volatility. Such stocks will bounce back soon. Investors’ psychological behaviour is more important in such contexts.
"Fundamentals indicate that the market is moving to a new high: It’s only a question of time. Investors’ response should be based on this understanding," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
"On the flows front, FIIs were net buyers to the tune of approximately Rs 785 crore, while DIIs were strong net buyers with inflows of around Rs 3,912 crore, underscoring the continued dominance of domestic participation even as foreign inflows begin to improve.
"Given this backdrop, a selective buy-on-dips strategy remains appropriate. Traders should keep tight trailing stop-losses and consider partial profit-booking on rallies. Fresh long positions can be considered once the Nifty convincingly crosses 26,100–26,130, while keeping a close watch on global cues and key technical levels," said Tailor.
Buying in heavyweights
The three heaviest weighted stocks in the benchmarks, HDFC Bank, ICICI Bank and Reliance Industries, which together constitute nearly 30% weightage on Nifty 50, gained about 1% each.
India VIX stood at 11.96 on November 26, indicating a low-volatility environment. This reflects stable market sentiment, with traders not expecting major near-term swings.
Meanwhile, Bank Nifty hit fresh record high of 59,515 on November 26 with Axis Bank, IndusInd Bank leading the gains.
"Lower interest rates in the US generally improve liquidity conditions and increase the attractiveness of emerging markets such as India, prompting risk-on sentiment across equities. The rally is also being supported by sector-specific buying, with gains seen across the board. Metal stocks and PSU banks are leading the move, supported by improving global commodity sentiment and selective value buying. Broader market participation indicates that the bounce is not limited to a single sector, lending strength to the overall market structure. Overall, the combination of strong global cues, easing rate concerns, and broad-based buying has helped the market stabilize after recent weakness," said Pravesh Gour, Senior Technical Analyst at Swastika Investmart.
Brent Crude below $63
Falling crude oil prices also aided the bullish market sentiment as Ukraine hinted that an intense diplomatic push by the U.S. administration to end Russia's war against it could be yielding fruit.
An end to the war in Ukraine could pave the way for the unwinding of Western sanctions against Moscow's energy trade, potentially adding more supply at a time when commodity prices have been battered by expectations of a glut next year.
Brent crude futures fell 89 cents, or 1.4%, to $62.48 a barrel, while U.S. West Texas Intermediate crude futures also fell 89 cents, or 1.5%, to $57.95 a barrel. Both benchmarks hit their lowest levels since October 22 during intraday trading.
Ukrainian President Volodymyr Zelenskiy could visit the U.S. in the next few days to finalise a deal with U.S. President Donald Trump to end the war, Kyiv's national security chief Rustem Umerov said.
Indian oil marketing companies' (OMC) stocks climbed on Wednesday as crude oil prices remained under pressure, extending their decline to one-month lows. The rebound in Indian Oil Corp, HPCL and BPCL stocks comes a day after the three PSU oil marketers fell on Tuesday following a sharp downgrade from Investec. The brokerage warned that weakening diesel marketing margins posed a material earnings risk despite stronger refining margins.
Technical View
"Derivatives data pointed to strong call writing at the 26,000 strike, while maximum put open interest at 25,800 indicated firm demand at lower levels. While the broader sentiment remains cautiously optimistic, a sustained close above the 26,000 mark will be essential to revive bullish momentum and unlock further upside potential in the coming sessions" said Amruta Shinde, Technical & Derivative Analyst at Choice Equity Broking Private Limited.
"From a technical perspective, Nifty 50 has witnessed a rebound after testing lower levels around 20-SMA. The index is currently trading above its short-term moving averages (9-DMA and 20-DMA), indicating a short-term pullback rally. However, it is still hovering near a crucial resistance zone of 26,200–26,277, which coincides with the upper trendline and prior supply area. Sustaining above this level will be key for further upside toward 26,400–26,500 in the near term. On the downside, 25,800–25,750 remains an important immediate support, followed by a stronger base near 25,500, where the 50-day moving average is placed. Momentum indicators also supporting the trend. Overall, the trend remains positive above key supports, but traders should adopt a buy-on-dips strategy until a decisive breakout above resistance confirms renewed strength," said Gour.
With inputs from Reuters
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