Mumbai: Indian stock markets extended their winning streak to a fifth consecutive session on Wednesday, with the benchmark Sensex climbing nearly 384 points to close above the 77,000 mark on buying in blue-chip financial, FMCG and auto shares amid foreign fund inflows and easing crude oil prices.
The rally, which has now added more than 4,000 points to the Sensex in five sessions, took both headline indices to their highest closes in more than two months and left the Nifty within sight of 24,000.
The 30-share BSE Sensex rose 383.55 points, or 0.50 per cent, to settle at 77,301.40, its highest close in more than two months and its first close above the 77,000 level since late August. During the day, the index surged 478.19 points, or 0.62 per cent, to an intraday high of 77,396.04, before settling slightly below that peak.
The 50-share NSE Nifty rose 149.75 points, or 0.63 per cent, to end at 23,960.60, reclaiming the 23,900 level for the first time in nearly two months and closing above its 200-day exponential moving average of 23,904 for the first time since August 13.
The five-day numbers tell the story of a powerful rebound. In the five sessions through Wednesday, the Sensex soared by 4,055.37 points, or 5.53 per cent, while the Nifty surged 1,261.75 points, or 5.55 per cent. For the Nifty, it was the strongest five-day advance in seven months, recovering nearly 1,800 points from its recent low of 22,179.
Broader markets outperformed the benchmarks on Wednesday, with the Nifty MidCap 100 rising 1.55 per cent and the Nifty SmallCap 100 rising 2.0 per cent, a sign that risk appetite had strengthened beyond the largest stocks and that investors were willing to buy smaller companies as well.
Within the Sensex, the winners were led by Bharat Electronics, Titan, InterGlobe Aviation, Bajaj Finance, ITC and Adani Ports. The laggards included Tata Consultancy Services, HCL Technologies, Infosys and Eternal, and information technology was the only sectoral loser on the day, a notable divergence in a market that otherwise rose broadly.
That pattern, with financials, consumer goods and aviation leading while technology lagged, suggests that investors are rotating towards domestic-facing sectors that benefit from festive consumption and falling input costs, rather than export-oriented technology firms that face a more uncertain global outlook.
Foreign money has been a key driver of the rally. Foreign Institutional Investors bought equities worth 6,836.81 crore rupees on Tuesday, according to exchange data, and sustained foreign inflows through the week have provided the fuel for the market's climb. Domestic institutions and retail investors have also participated, encouraged by better-than-expected quarterly earnings, resilient festive consumption, and optimism that the upcoming Union Budget may include tax relief.
Analysts have pointed to the combination of foreign buying and domestic optimism as the reason the rally has been broad-based rather than confined to a handful of stocks.
Global factors have helped as well. Brent crude, the global oil benchmark, declined 0.73 per cent to 102.8 dollars per barrel, easing one of the biggest worries for an oil-importing economy like India. Lower crude prices reduce the import bill, ease inflationary pressure, and support the rupee, all of which are positive for equities.
At the same time, the outcome of the US midterm elections, in which American voters gave the opposition Democratic Party control of Congress, improved global sentiment by raising expectations of a more measured approach to trade and tariff policies.
US equity markets ended mostly higher on Tuesday, and Asian markets were mixed, with Japan's Nikkei ending lower while South Korea's Kospi, Shanghai's SSE Composite and Hong Kong's Hang Seng settled higher, and European markets trading in positive territory.
The previous session had set the stage for Wednesday's gains. On Tuesday, the Sensex had jumped 1,225.07 points, or 1.62 per cent, to settle at the day's high of 76,917.85, while the Nifty had rallied 370.05 points, or 1.58 per cent, to end at the day's high of 23,810.85.
Wednesday's more modest advance, of 384 points on the Sensex and 150 points on the Nifty, therefore looks less like a fresh surge and more like a consolidation of Tuesday's big move, with investors buying on dips and holding on to gains rather than chasing prices higher. That kind of steady, two-step advance is often seen as healthier than a single explosive day, because it suggests that buyers are willing to support the market at higher levels.
Market commentators struck an upbeat but measured tone. Vinod Nair, Head of Research at Geojit Investments, noted that Diwali fireworks had continued on Dalal Street, with mid and small caps extending their outperformance as risk appetite strengthened.
He pointed to the US midterm outcome improving global sentiment and raising expectations of support for foreign inflows into emerging markets, and to domestic factors including optimism around possible tax relief in the upcoming Budget, better-than-expected quarterly earnings and resilient festive consumption.
The festive season matters for Indian markets because consumer spending on gold, vehicles, electronics and other goods typically peaks around Diwali, and strong festive sales feed directly into corporate earnings.
Early signals for Thursday were also positive. GIFT Nifty, which trades on the NSE IX and is often watched as an early indicator for the Indian market, was trading 377 points, or 1.57 per cent, higher at 24,327 on Thursday morning, signalling a strong gap-up opening for Dalal Street.
If that signal holds, the Nifty could open above 24,000 for the first time in the current rally, a level that would mark a further psychological milestone and could attract additional buying from investors who track round numbers.
What should investors watch next? The first test is whether foreign inflows continue. The rally has been powered in large part by overseas buyers returning to Indian equities, and any reversal in that flow could quickly stall the advance.
The second test is crude oil. Brent at around 102 dollars a barrel is still high by historical standards, and any fresh spike driven by geopolitical tensions or supply disruptions would revive inflation worries. The third test is quarterly earnings.
Companies have so far reported better-than-expected results, but the earnings season is not over, and any major disappointment could prompt profit-taking. Finally, developments in US-Iran diplomacy and in global trade policy will continue to shape sentiment, because they affect both crude prices and the appetite of foreign investors for emerging markets.
There are also reasons for caution. A five-day gain of more than 5 per cent is, by any measure, a sharp move, and markets that rise this fast often pause or correct as investors book profits. The fact that information technology, one of the market's largest sectors, lagged on Wednesday is a reminder that not every part of the market is participating equally.
And the broader economic picture, while improving, still contains risks, from elevated crude prices to uncertainty over global growth. Experienced investors therefore tend to treat such rallies as opportunities to review their portfolios rather than as signals to chase every rising stock.
For ordinary savers and retail investors, the rally is good news for mutual fund and pension portfolios, which have recovered a significant part of their recent losses in just five sessions. The Nifty's recovery from its low of 22,179 to nearly 24,000 represents a gain of close to 8 per cent from the bottom, and the Sensex's climb back above 77,000 restores a level that had seemed distant only a fortnight ago.
Whether the market can hold those gains through the Diwali weekend and into the Budget season will depend on the same factors that drove the rally: foreign money, crude prices, earnings and global sentiment.
For now, Dalal Street has reason to celebrate. Five straight days of gains, a Sensex above 77,300, a Nifty knocking on the door of 24,000, broader markets outperforming, and foreign investors buying in size together add up to one of the strongest weeks Indian markets have seen in months. The festive cheer, it seems, has arrived on the trading floors as well as in the shops.
(Reporting based on Business Standard, The Telegraph, The Hindu BusinessLine and The Times of India.)