Sensex rises 630 pts, Nifty at 18,500: 6 factors behind today's market rally

Indian stock markets surged sharply higher during the second half of the trading session on Friday as the headline peers extended their gains after initial volatility. Both global and domestic factors supported the market sentiments during the day as investors added more than Rs 2.5 lakh crore in their kitty as total market capitalization of BSE settled at Rs 282.59 lakh crore mark.

For the day, BSE Sensex surged about 629.07 points, or 1.02 per cent, to close at 62,501.69, while NSE's Nifty50 surged 178.20 points, or 0.97 per cent, to end the session at 18,499.35. Fear gauge India VIX eased sharply about 5 per cent and ended the week at 11.90-level. Here are the key factors that lift the markets during today's session:

Buying in RIL

Buying interest in index heavyweights like Reliance Industries lifted the headline peers higher as the stock rose 3 per cent. The Mukesh Ambani-led conglomerate alone contributed more than 210 points in the 600-point rise of BSE Sensex. ICICI Bank, Hindustan Unilever and Infosys were other top contributors, with cumulatively adding more than 150 points.

Allround buying
Buying interest was seen across all the sectors during the session. All the sectoral indices of Nifty settled in green on Friday, with Nifty Media index risinge over 2 per cent, while, Nifty IT, FMCG, Metal, Pharma, Realty, Healthcare and PSU Bank indices adding more than a per cent each. The three top losers on Nifty were ONGC, Grasim and Bharti Airtel.

Renewed FIIs interest
Foreign investors have remained net buyers for Indian Equities of late. According to the data from NSE, overseas investors poured in Rs 589 crore in the Indian Equity markets on Thursday. FIIs have pumped in more than Rs 20,250 crore in the Month of May so far till Thursday.

Rupee has depreciated to 82.74 to the dollar and the US 10-year yield has spiked to 3.82 per cent In spite of this negative development, FII inflows continue and impart resilience to the market. Both FIIs and DIIs are buyers now, and this is strong support to the market, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Gains in US stock
Progress on US debt ceiling talks bolstered global equities and sent gold prices to a two-month low on Thursday, as forecast-smashing revenue from chipmaker Nvidia fueled a rally in AI-related companies. Treasury yields were up and the US dollar climbed to its highest level since mid-March. The S&P 500 climbed 0.88 per cent to end the session at 4,151.28 points and the Nasdaq surged 1.71 per cent to 12,698.09 points, while the Dow Jones Industrial Average declined 0.11 per cent to 32,764.65 points.

Global markets rebound
Asian stocks were mostly higher on Friday to end a volatile and dramatic week on a strong note.  MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.67 per cent. European shares also inched up on Friday on gains in mining and technology stocks although the main benchmarks were set for steep weekly losses on growing concerns over a slowing global economy and the debt ceiling talks in the United States. The pan-European STOXX 600 index rose 0.2 per cent after closing at an eight-week low on Thursday.

Global economies are showing signs of slowdown as the monetary tightening by the central banks starts showing its effects on consumer demand. China too is facing a fresh wave of Covid cases which could derail the already lackluster recovery, said Mitul Shah - Head of Research at Reliance Securities.

Lower inflation and industrial growth provide room for the RBI to continue with its pause in the rate hiking cycle. The decline in WPI bodes well for the CPI in future months as lower raw material prices are passed through by the producers to the consumers which will also help in reviving slowing consumption.

Technical view
In the intraday session, after the gap-up opening, after making a day low of 18,333 the Nifty traded above 18,400 level and remained up throughout the day; the Nifty formed a big positive candle after forming a bullish engulfing type pattern yesterday on the daily chart, said Rohan Shah, head technical analyst at Stoxbox.

"Nifty closed with a higher high positive candle.  Intraday traders can look for long opportunities above 18,520 if the closing comes above 18,520 in a 15 min chart. Traders can look for fresh shorts only if nifty breaks the 18,400 level & remains below for 15 min to ensure short," he said.

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