Benchmark indices closed 1.25% higher on Tuesday, amid heavy buying in banking and financial heavyweights and positive global equities. Extending gains for the second consecutive session, Sensex ended 503 points higher at 40,261 and Nifty rose 144 points to 11,813. Yesterday, Sensex ended 143 points higher at 39,757 and Nifty gained 26 points to 11,669.
In the forex market, the rupee settled almost flat at 74.41 against the US dollar.
ICICI Bank, Hindalco and SBI were among the top gainers on Nifty whereas UPL, NTPC and Reliance Industries were the top 3 Nifty losers. Among sectors, except IT and realty, all the indices closed in the red. While banking, financials and auto index closed 3% higher, the metal and auto index rose 2% and 1.5%, respectively.
Here's a look at five factors that fuelled the rally on Dalal Street today.
1. US elections
Markets were bouyed globally today, ahead of the US Presidential election which is expected to shape the government's response and actions for turning around the economy.
Investors watched the outcome of US elections, hoping a win by challenger Joe Biden in the presidential race might lead to more economic stimulus.
"Nifty has reclaimed the 11800 marks ahead of the mega global event and hence, all eyes would now be on the U.S. elections outcome and the global market's reaction on it. Due to the event, there may be some higher volatility and hence, traders are advised to follow proper money management techniques and avoid taking undue risks. Till the above mentioned short term supports are intact, one should avoid contra trades and look for opportunities in direction of the primary trend," said Ruchit Jain (Senior Analyst - Technical and Derivatives, Angel Broking.
"On Wednesday, we could see Indian market being volatile, ahead of the exit poll on prediction after the completion of voting in the US that would drive the sentiment of the market ," said Shrikant Chouhan, Executive Vice President (Equity Technical Research), Kotak Securities.
Keshav Lahoti-Associate Equity Analyst, Angel Broking said," Global cues were supportive. Dow Futures, Nasdaq Futures and FTSE were up by 1.6%, 0.9% and 1.8% respectively. We expect volatility to continue in the market due to the US election result."
2. Banking shares rally
Banking, finance sectors stocks were in heavy demand today after the Supreme Court said it would hear the loan moratorium on Nov 5, which many believe will be in the favour of banks. ICICI Bank, HDFC twins, Axis Bank, State Bank of India and Bajaj Finance were among the top gainers from this index today.
3. Positive economic activity
Asian markets reversed the trend, taking cues from the US and traded in positive territory amid improving macro economic data, boosting hopes that the global economy is coming back to track.
US manufacturing activity accelerated more than expected in October, with new orders jumping to their highest in nearly 17 years. European markets also traded higher on better than expected manufacturing data.
Furthermore, Chinese factory activity expanded the fastest in a decade, as domestic demand surged, adding further momentum to an economy that is quickly recovering from the coronavirus crisis. and eurozone manufacturing also sped up.
On the domestic front, India's factory activity expanded at its fastest pace in over a decade in October, a private survey showed as demand and output continued to recover strongly from coronavirus-related disruptions but firms cut more jobs.
4. Q2 earnings
Strong September quarter earnings have helped market gain ground today. With companies seeing improvement during festive season and economy heading towards normalcy, many investors hope for an economic rebound in this quarter, causing stock-specific buying.
Meanwhile, September quarter earnings announcements today by Sun Pharma, PVR, Adani Gas, Adani Ports, Muthoot Finance, Ajanta Pharma, CARE Ratings, Dabur will also set the tone for the stock market tomorrow.
Apollo Tyre, Greenply, HPCL, JK Lakshmi Cement, Lupin, Petronet LNG, Pidilite, State Bank of India, United Spirits among others will publish their respective financial results on November 4.
5. Technical outlook
Shrikant Chouhan, Executive Vice President (Equity Technical Research), Kotak Securities said," Indian market rose after a massive surge in the US stock futures and unusual strength in European and Asian markets. Nifty 50 index climbed 1.24 per cent to close at 11813. The Nifty has broken the trading range of the last three days at 11750 and hit the resistance of 20 days SMA, which is at 11825. Buying is advisable if Nifty comes back to 11750/11700 levels with a final stop loss at 11650. On the higher side, 11900/11950 would be the resistance zone, where one need to book profits on long positions."
"The Nifty is trading above the 11,750 mark and if we can sustain that, it could be used as a stop loss for all short positions on the index. We would need to wait for more clarity before we can go long on this market. Should a buy get triggered on the upside, 12,200-12,300 can be expected," said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
"The short-term trend of the Nifty is range-bound with positive bias. The daily/Intraday chart pattern signals the possibility of an upside breakout attempt of 11,750 levels in the next one-two sessions. On the upper side, 11,800-11,850 is going to be the next resistance. Immediate support is placed at 11,550," said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.