The domestic equity benchmarks rebounded sharply on Monday, with the Sensex rallying 2,975 points and the Nifty climbing past the 24,900-mark, as easing geopolitical tensions between India and Pakistan and positive US-China trade talks lifted investor mood. This is the biggest single-day rise (in percentage terms) in last four years.
After opening on a high note, the Sensex soared by 2,975.43 points or 3.74 percent to settle at a more than seven-month high of 82,429.90. During the day, it rallied 3,041.5 points or 3.82 percent to a high of 82,495.97. The Nifty skyrocketed 916.70 points or 3.82 percent to close at 24,924.70. In intra-day trade, the barometer zoomed 936.8 points or 3.90 percent to 24,944.80.
Adani Enterprises, Jio Financial Services, Trent, Shriram Finance, Axis Bank were among the top gainers in today's trading session.
Here are key factors behind stock market rally today
1) India-Pak ceasefire: India and Pakistan on Saturday announced reaching an understanding to stop all firings and military actions on land, air and sea, with effect from 5 pm that day. This came after India launched 'Operation Sindoor' on early May 7 to destroy nine terror infrastructures in Pakistan and Pakistan-Occupied-Kashmir in retaliation to the Pahalgam terror attack.
"The de-escalation between India and Pakistan removes a key overhang on investor sentiment and is likely to be seen as a major positive development by financial markets. Historically, markets have responded positively to such geopolitical cooling," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
2) US-China Trade Talks: The conclusion of high-level trade talks between the US and China in Switzerland further buoyed the investor sentiment. Both countries signalled progress, with US officials pointing to a possible deal aimed at narrowing the American trade deficit, while Chinese authorities spoke of an "important consensus".
China’s Vice Premier He Lifeng said a joint statement would be issued in Geneva on Monday, and Vice Commerce Minister Li Chenggang hinted at “good news for the world.”
3) Strong global cues: In Asian markets, South Korea's Kospi, Shanghai's SSE Composite index and Hong Kong's Hang Seng were quoting higher while Japan's Nikkei 225 index traded marginally lower. Ahead of the expected joint statement from Geneva, US Futures were up over 2 percent, signalling global optimism over a resolution to the trade dispute between the world’s two largest economies.
4) Nifty IT zooms: IT stocks gained on Monday on hopes of US-China trade deal after positive talks in Switzerland. Oracle Financial Services Software, Persistent Systems, Coforge, Mphasis and Infosys gained up to 6 percent intraday.
5) India Vix eases: The fear gauge volatility index or India Vix eased off, after India and Pakistan announced a ceasefire, leading to the India VIX sinking nearly 20 percent intraday.
What technical analysts said?
Anand James, Chief Market Strategist at Geojit Investments, said "Though we certainly did not expect a vertical bounce back, we did go in last Friday expecting a consolidation rather than outright break down, given the support offered by the 200 day SMA near 24050, as well as fibo support near 23950-870."
"Even as Nifty closed in the red on Friday, with weekend uncertainty looming, 62% of its constituents bounced atleast 196 from their respective lows, suggesting that most of the damage was limited to the downside gapped opening. This is contrary to usual bear moves, where a dead cat bounce is usually followed by a powerful plunge. That another wave of downside did not unfold on Friday, is an indication towards resilience, or that good deal of certainty has been priced in already. This sets up for a bounce with least objective of 24260 and an optimistic objective of 24770-850. However, should we fail to see past 24590, or if 24150 fail to hold after an upswing, expect resumption of downtrend aiming 23670-460," he added.
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