Sensex regains its crucial 28,000 level: Five factors that drove the market higher

The market started off the October quarter on a stellar note with S&P BSE Sensex rising 377 points to reclaim its crucial 28,000-mark, while the broader Nifty50 topped its key 8,700-mark riding on positive manufacturing data at home along with favourable global cues.

The 30-share index ended the day at 28,243, up 377.33 points, while broad-based 50-share index quoted 8,738, up 126.95 points at close.

Below are five factors that are fuelling the rally in the benchmark indices:

1. Business conditions hold positive momentum: Market rallied buoyed by manufacturing PMI for September that came in above the 50-mark for the ninth straight month signalling expansion, and improving business conditions. However, the rate of expansion eased since August and was relatively modest at 52.1 in September as compared to 52.6 in August. A reading above 50 points to expansion while one below means contraction.
2. RBI rate cut hopes: While concensus says Reserve Bank of India (RBI) will adopt a wait-and-watch approach on its policy review tomorrow, many believe it will take a dovish stance on future rate trajectory as consumer inflation fell to a five-month low in August and manufacturing also contracted slightly in September. "There is some optimism because of an expectation of a rate cut," Saurabh Jain, assistant vice president of research at SMC Global Securities told Reuters.
3. Auto stocks boost index gains: Auto makers gained on the back of upbeat monthly sales in September. Maruti Suzuki rose as much as 4.43 per cent to a record high after posting a rise of 31 per cent in September vehicle sales. Mahindra and Mahindra and Eicher Motors rose over 3 percent each, while Tata Motors was up 2.08 per cent.
4. Deutsche fears recede: Shares of Deutsche Bank recovered slightly on Friday on reports that the bank was negotiating a much smaller fine with the US Department of Justice, though the Wall Street Journal reported on Sunday that the talks were in flux. The DOJ fined Germany's largest bank $14 billion earlier in September for what it alleged were sales of toxic mortgage-backed securities.
5. UK to trigger Brexit process by March 2017: British Prime Minister Theresa May said she will formally trigger the process of the UK's exit from the 28-nation EU by the end of March 2017, ending the speculation surrounding the timing of the important move. May confirmed the deadline for triggering Article 50 of the Lisbon Treaty, which sets in place a two-year process of withdrawal from the European Union or so-called Brexit, as the first quarter of next year.