Sensex and Nifty traded higher on Thursday, tracking positive global cues after Trump granted a one-month exemption on his new tariffs on imports from Mexico and Canada for US automakers.
At 1:45 pm, benchmark Sensex rose a whopping 750 points from day's low while Nifty reclaimed the psychologically important level of 22,500. Since yesterday, the Sensex and Nifty are up nearly 2 percent.
Key drivers of the market rally:
1) China stimulus hopes: Market participants are anticipating further stimulus measures from Chinese authorities to boost consumption and offset economic pressures amid escalating trade war with the United States. This has led to a surge in base metal prices, supporting a rally in metal stocks in India. Nifty Metal index rose nearly 2 percent in trade. “Base metals rallied in Asian trade on the prospect of further China stimulus measures,” Daniel Hynes, senior commodity strategist at ANZ Bank told Reuters.
2) Positive global cues: Asian markets followed an overnight rally on Wall Street after US President Donald Trump softened his stance on new tariffs for Mexico and Canada. South Korea’s Kospi gained 0.7 percent, while Hong Kong’s Hang Seng surged over 3 percent. The S&P 500 jumped 1.1 percent to 5,842.63, the Dow Jones Industrial Average climbed 1.3 percent to 43,006.59, and the Nasdaq Composite advanced 1.46 percent to 18,552.73. China also posted better than expected manufacturing PMI data which provided a boost to investor sentiment.
3) Weakening dollar index: The US dollar index slipped to a four-month low of 104.3, which is considered favourable for emerging markets like India. “If this trend continues, foreign institutional investor (FII) selling may subside, paving the way for further market gains,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
4) Crude oil decline: Crude oil prices plunged to a six-month low, lifting market sentiment. Shares of oil marketing companies (OMCs) extended their gains for the fourth consecutive session. Brent crude hovered below USD 70 per barrel after the OPEC+ alliance decided to increase output from April, a move expected to benefit Indian refiners by improving marketing margins on retail fuel. “The escalation of the trade war has raised concerns about global demand, adding pressure on oil prices,” said Rahul Kalantri, VP Commodities at Mehta Equities Ltd.
5) RBI liquidity measures: The Reserve Bank of India (RBI) continued efforts to inject liquidity into the banking system. It announced open market purchases of government securities and USD/INR swaps amounting to Rs 1.9 lakh crore. On February 28, the central bank conducted a $10 billion swap to boost long-term liquidity, which saw strong demand.
Shares of financial services companies such as Shriram Finance, Bajaj Finance, and Bajaj Finserv were up nearly 3 percent. Indices related to the financial space such as Nifty Bank, Nifty Financial Services, Nifty Private Bank, and Nifty PSU Bank rose up to 1 percent.
Technical outlook:
Anand James, Chief Market Strategist at Geojit Financial Services, noted that the Nifty’s close above 22,400 has confirmed a morning star candlestick pattern, indicating a trend reversal. “The next resistance is seen at 22,513, but we expect enough momentum to push towards 23,000. However, volatility must remain contained above 22,270 for the uptrend to sustain. A break below 22,190 could challenge the upside view,” he added.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
