Sensex, Nifty close nearly 2% higher; 5 factors that are driving the market rally

The Indian market witnessed sharp gains on November 9 as the key equity indices Sensex and Nifty hit their record highs of 42,645.33 and 12,474.05, respectively, in intraday trade.

Eventually, Sensex closed at 42,597.43, up 704 points, or 1.68 percent, and Nifty settled at 12,461.05, up 198 points, or 1.61 percent.

BSE Midcap and Smallcap indices closed 1.01 percent and 0.57 percent higher, respectively.

“Let’s ride the wave because there is abundant liquidity and the banks which were the most under-owned class is leading from the front now,” said Sanjiv Bhasin, Director at IIFL Securities.

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

Joe Biden’s victory

Democratic candidate Joseph Biden won the 2020 United States presidential election after the state of Pennsylvania was called in his favour.

Analysts and experts are of the view that the Indian market is poised to gain from Biden’s Presidency.

Biden’s victory is most likely to be a favourable outcome for markets as it will instill confidence amongst investors by reducing policy uncertainty.

Read more: What does Joe Biden’s victory hold for the Indian market?

FII inflow

Foreign institutional investors (FIIs) have been on a buying spree in the Indian market. FIIs have pumped in Rs 13,399.41 crore into the Indian market in the month of November so far, data available with Moneycontrol showed.

“By the end of this month, India’s weight in MSCI will go up. That is supposed to cause an inflow of about $ 3 billion. This month will be good as far as inflows of FII is concerned,” Samir Arora, Founder & Fund Manager, HeliosCapital told CNBC-TV18.

Read more: FIIs remain bullish on Indian market; the trend likely to sustain, say experts

Positive global cues

Indian equities rose in sync with its major global peers as investors cheered Biden’s victory on expectations of stimulus and less regulatory reforms.

As per Reuters, the Democratic candidate’s election victory was already largely priced in by markets, which had been trading with the view of a Biden presidency and a Republican-controlled U.S. Senate since last week.

Q2 earnings

Markets are currently riding high on global optimism and favorable earnings announcements.

“The markets are taking hope and conviction out of the massive performance that we have seen out of the corporate sector in India in this quarter. We have seen some very stunning numbers across market segments in most sectors. It is very surprising to see the kind of performance that corporate India has delivered. It is something which we have never seen even pre-COVID,” said Taher Badshah, CIO–Equities, Invesco Mutual Fund.

Analysts are expecting those Q3 earnings to be much better than Q2 and see the strong possibility of earnings upgrades.

Improving macro

Signs of improvement on the macro front have also boosted investor sentiment. Positive macroeconomic data on core sector growth, rebound in GST revenues and robust power demand is driving economic recovery.

Rusmik Oza, Senior VP (Head of Fundamental Research) at Kotak Securities pointed out India’s economy is showing signs of improvement despite lesser stimulus.

The body language of the government has been ensuring that it will take measures to keep the economy up and running.

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