Investor wealth jumps Rs 4 lakh cr as Sensex, Nifty gain over 1%; is record-high breakout coming?

Domestic equity benchmarks Sensex and Nifty rallied on Wednesday, closing higher on the back of upbeat global cues, rising expectations of US Fed rate cuts, and optimism that easing valuation concerns could draw foreign investors back into the market.

At the close, the stock market snapped its three-day losing streak; the Sensex rose 1022.50 points, or 1.21 per cent, to 85,609.51. The Nifty50 also gained 320.50 points, or 1.24 per cent, to finish at 26,205.30.

Investors’ wealth jumped by over Rs 4 lakh crore in the session, as the combined market capitalisation of BSE-listed companies climbed to Rs 474 lakh crore from Rs 470 lakh crore in the earlier session.

Vatsal Bhuva, Technical Analyst at LKP Securities, said that Bank Nifty ended the session with a robust bullish candle, indicating that the brief pause by the bulls has likely ended and upside momentum is beginning to pick up again.

“The RSI entering into a bullish crossover further confirms strength in the index. Going ahead, a buy-on-dip strategy should be maintained as long as the index sustains above support levels. Immediate support is placed at 59200, while 58800 serves as a positional support. On the upside, potential resistance is expected near the psychologically important 60000 level," Bhuva said.

Bajaj Finserv led gainers on the Sensex, rising 2.51 per cent to Rs 2,081.40. Bajaj Finance followed with a 2.36 per cent surge. Among other gainers, Tata Steel, Reliance Industries, Sun Pharma and Tata Motors PV advanced 2.04 per cent, 1.99 per cent, 1.95 per cent and 1.92 per cent, respectively.

Five stocks, namely, HDFC Bank, Reliance Industries, ICICI Bank, Infosys and L&T, contributed heavily to the Sensex’s rally.                   

Among sectoral indices, the BSE IT index rose 1.49 per cent to close at 36,262.07, while the BSE Metal index surged 2.08 per cent to end the session at 34,063.61.

Among Sensex constituents, Reliance Industries, Axis Bank, State Bank of India and Larsen & Toubro (L&T) hit their 52-week high on the BSE today.

Vinod Nair, Head of Research at Geojit Investments Limited, said domestic equities logged strong gains, buoyed by the festive “Santa Claus rally” sweeping through global markets. “This uptrend was fuelled by robust retail and domestic institutional investor (DII) inflows, while foreign institutional investor (FII) flows remained modest.,” he said.

“On a global scale, market sentiment improved with rising expectations of a U.S. Federal Reserve rate cut in December, alongside softer U.S. yields and a weaker dollar. Additionally, a 1% decline in crude oil prices helped to ease inflationary concerns. On the domestic policy front, the Reserve Bank of India (RBI) is widely anticipated to implement a 25-basis point rate cut in December, supported by moderating inflation and a dovish stance,” Nair said

Nair further added that increasing optimism surrounding a potential truce between Russia and Ukraine is enhancing risk appetite, fostering a positive outlook for the upcoming year.

Overall, out of 4,325 actively traded stocks on the BSE, 2,818 ended higher, while 1,354 declined, and 153 closed unchanged. During the session, 111 stocks scaled their 52-week highs, whereas 170 slipped to 52-week lows. Meanwhile, 190 scrips were locked in their upper circuits and 173 in lower circuits.