Indian benchmark indices hit fresh highs on Thursday, in line with global equities as investor appetite for riskier asset improved amid easing trade tension between the US and China. Sensex on Thursday breached its previous high level of 40,676 to hit fresh high of 40,688 mark. Nifty made an intraday high to 12,021.40 level, trading 81 points away from the 52-week high of 12,103.05.
Top Nifty gainers included Sun Pharma, IndusInd Bank, Bharti Infratel, Hindalco Industries and JSW Steel, while UPL Ltd, YES Bank, GAIL, BPCL and Cipla were the top losers.
Here are five factors that led to market rally:
1. Surge in metal index over US-China trade development
US-China trade development not only lifted broader market sentiments but also led metal indices to rally, with JSW Steel shares rising 10% post the announcement, followed by 4% rise in Vedanta and 2.38% rise in Hindalco shares. This was followed by Tata Steel that traded up nearly 5% from day's low and later rose 0.43%.
2. US-China trade deal optimism
China and the United States have both agreed to cancel in phases the tariffs imposed during their prolonged trade war, the Chinese commerce ministry said.
Reuters reported on Wednesday a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim trade deal could be delayed until December as discussions continue over terms and venue. Among various suggestions was to sign a deal after a scheduled NATO meeting in early December.
3. Better than estimates quarter earnings
Market's momentum has stayed strong throughout the Q2FY20 season as healthy Q2 earnings from big corporate and attractive valuation for mid & small caps are providing a favourable risk-reward to investors. Corporate's Q2FY20 earnings season turned marginally better and in line with street estimates so far.
4. Realty stocks rally on govt's bailout fund
Realty shares were in upbeat mood after Union Cabinet approved the formation of a bailout fund worth Rs 25,000 crore to finish stalled housing projects in the country.
"Government will give Rs 10,000 crore. We have already spoken with institutions like SBI, LIC and so on, who together will also put money which will touch Rs 25,000 crore. This will be kept open. Several sovereign funds have also expressed interest to come into it. Gradually, we will keep adding to the AIF corpus," the Finance Minister said.
Following the announcement, there was a major rally registered on broader indices Sensex and Nifty. Shares of real estate developers surged with the S&P BSE Realty index rising to the highest level in nearly four months.
Reacting to the news, Indiabulls Real Estate traded nearly 5% higher, Sobha Limited rose 2.5%, followed by 1.5% rise in Oberoi Realty Limited and 1.25% advance in Prestige, DLF and Godrej Properties.
5. Upbeat global market
Globally market traded upbeat amid positive market sentiments following reports that China has agreed for the phased removal of tariffs with the US. Overwhelmed by the news, US Futures gained 137 points or 0.5%. While Asian shares paused near multi-month peaks, European stocks rose for the fifth straight session and hit their highest in four years.
By Rupa Burman Roy