Sensex jumps nearly 600 points, Nifty reclaims 11,400; 5 factors that fuelled the rally

Across-the-board healthy buying lifted market benchmarks Sensex and Nifty over a percent higher each in intraday trade on October 1.

Sensex jumped over 600 points while Nifty crossed 11,400 on the upside. At 12:50 hours, BSE Sensex was 626 points up at 38,694 while Nifty was 171 points up at 11,418.

Here are 5 factors that fuelled the rally in the market:

Unlock 5.0: The Ministry of Home Affairs (MHA), on September 30, announced the Unlock 5.0 guidelines, further relaxing curbs on activities outside of containment zones.

Cinemas, theatres, and multiplexes will be allowed to operate with up to 50 percent of their seating capacity, for which separate SOPs will be issued by the Ministry of Information and Broadcasting.

Business to Business (B2B) exhibitions will now be permitted to open, for which SOPs will be issued by the Department of Commerce.

Positive global cues: The Indian market followed cues from global peers. Asian market rose on hopes of US stimulus.

Global shares tried to extend gains on Thursday on renewed hopes for fresh US stimulus measures, but mounting uncertainty ahead of America’s presidential election and technical problems in Japan kept gains in check, reported Reuters.

Green shoots in the economy: As per Reuters, India’s factory activity expanded at its fastest pace in over eight years in September as a relaxation in coronavirus lockdown restrictions drove a surge in demand and output, a private survey showed on Thursday, though layoffs continued.

This influenced the mood of the market as hopes of faster economic recovery, with further relaxation in lockdown, bolstered.

Encouraging auto sales numbers: India’s September auto sales numbers showed significant signs of improvement.

Bajaj Auto sold a total of 441,306 vehicles (commercial vehicles and two-wheelers) in September 2020, a 10 percent increase year-on-year (YoY) numbers as compared to the 402,035 units sold in September 2019, the company informed the exchanges on October 1.

Maruti’s total sales went up 30.8 percent at 1.60 lakh units against 1.22 lakh units (YoY). Total sales grew 29 percent at 1.60 lakh units against 1.24 lakh units (MoM). Domestic sales went up 32.2 percent at 1.52 lakh units against 1.15 lakh units (YoY). Exports grew 9 percent at 7,834 units against 7,188 units (YoY). Domestic passenger vehicle sales jumped 33.9 percent at 1.47 lakh units against 1.10 lakh units.

Total sales of Escorts went up 9.2 percent at 11,851 units against 10,855 units (YoY). Total sales were up 63.1 percent at 11,851 units against 7,268 units (MoM). Domestic sales were up 8.9 percent at 11,453 units against 10,521 units (YoY). Exports went up 19.2 percent at 398 units against 334 units (YoY).

Strong buying in bank stocks: Most bank stocks rallied, giving a strong boost to market benchmarks.

Shares of IndusInd Bank, RBL Bank, Axis Bank, Kotak Mahindra Bank, HDFC Bank and SBI, all traded with healthy gains. At 12:50 hours, the BSE Bankex index was up more than 3 percent with all stocks in the green.