Sensex, Nifty rise over 1% each; top 5 triggers behind the market rally

Indian equities witnessed strong buying interest in the early trade on October 21 as the key equity indices Sensex and Nifty jumped over a percent each within the first hour of trade.

At 10:05 hours, Sensex was 390 points, or 0.96 percent, up at 40,934.60 while Nifty was at 12,004.60, up 108 points or 0.91 percent.

The rally was broad-based as mid and small-caps also rose in sync with the benchmarks. BSE Midcap and Smallcap indices were 0.91 percent and 0.71 percent up, respectively, at that time.

Among the sectors, BSE Metal rose over 2 percent while Bankex, Finance, Oil & Gas and Realty climbed over a percent each.

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Here are the top 5 factors that triggered the rally in the market:

Positive global cues: Indian equities rose, tracking the trend of major global peers. US and Asian markets saw healthy gains as rekindled hopes for a new round of US stimulus fanned the risk appetite of investors.

Nasdaq, Hang Seng, Nikkei and Kospi logged gains. The Dow Jones Industrial Average ended up 0.40 percent on Tuesday. The S&P 500 rose 0.47 percent, and the tech-heavy Nasdaq Composite rose 0.33 percent.

Banking, finance stocks lead: Most banking and finance stocks witnessed healthy gains, giving a fillip to the market benchmarks.

Shares of HDFC twins, ICICI Bank, Axis Bank, Kotak Mahindra Bank and State Bank of India were among the top contributors to the gains in the Sensex.

Trump agrees to large aid: Market across the globe had been showing some nervousness awaiting fresh US stimulus. Media reports suggest that the US President Donald Trump has shown a willingness to accept a large aid

As per Reuters, the White House and Democrats moved closer to an agreement on a new COVID-19 relief package as the US President Donald Trump said he was willing to accept a large aid bill despite opposition from his own party.

In-line Q2 earning: Quarterly earnings, so far, have been in-line with market expectations.

On October 21, Hindustan Unilever, the FMCG major, has reported a profit of Rs 2,009 crore in the quarter ended September 2020, rising 8.7 percent compared to Rs 1,848 crore in the same period last year.

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter at Rs 2,869 crore grew by 17 percent YoY and margin improved by 30 bps compared to September quarter 2019.

The CNBC-TV18 poll estimates for EBITDA and margin were at Rs 2,750 crore and 24.6 percent for the quarter.

Stimulus hopes: As per media reports, the government may be open to another stimulus package and have started a mid-year review of the economy.

Finance Minister said that the options for another stimulus package are still open. Recently, the government announced steps to stimulate consumer demand consisting of measures like Rs 10,000 festive advance for government employees, Rs 12,000 crore allocation for 50-year interest-free loans to states to boost the economy, a payment of cash in lieu of LTC among other things.

Meanwhile, foreign direct investment (FDI) in India has increased by 16 percent year-on-year to $ 27.1 billion during April-August this year, the Commerce and Industry Ministry said on October 20. During April-August last year, India had received FDI worth $ 23.35 billion.

The ministry said that the total FDI, which includes reinvested earnings, grew by 13 percent to $ 35.73 billion. “It is the highest ever for the first 5 months of a financial year and 13 percent higher as compared to the first five months of 2019-20 ($ 31.60 billion),” it added.