The BSE Sensex rose by 902 points or 1.34% to reach 68,383, while the Nifty50 was up 286 points or 1.41% at 20,554 by 9.17 am. The market capitalisationof all listed companies on the BSE increased by Rs 4.09 lakh crore to Rs 341.76 lakh crore, according to an ET report.Experts believe that the results of the state assembly elections, announced on December 3, have had a positive impact on the markets.
Among the top gainers in the Sensex pack were SBI, ICICI Bank, L&T, NTPC, and Airtel, which all rose by over 2%. M&M, HDFC Bank, Bajaj Finance, and Axis Bank also opened higher. Only Nestle opened in the red. Meanwhile, Adani stocks rallied, with Adani Energy Solutions rising by 14%, and Adani Power and Adani Green Energy surging over 12%. Adani Enterprises, Adani Total Gas, and Adani Wilmar also saw gains of 6-8%.
Why are BSE Sensex & Nifty50 rallying?
Here are the key factors contributing to the market rally:
State election results: The Bharatiya Janata Party’s clear mandate in the three major northern states of India – Rajasthan, Madhya Pradesh and Chhattisgarh – has boosted investor confidence and led to a record high on Dalal Street.
The state election results have been a significant event that can trigger renewed optimism and further market rally, says VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The market favors political stability and a government that is focused on reforms and market-friendly policies. From the market’s perspective, the results have exceeded expectations, he said.
Additionally, the decisive mandate have bolstered hopes of a stable Narendra Modi-led government returning to power in the 2024 Lok Sabha polls.
Asian Markets: Early trade in Asian shares showed mixed results. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4%, led by gains in South Korea and Australia. However, Japan’s Nikkei dipped by 0.4% as the yen continued to strengthen.
US bond yields: Last week, US Treasury yields reached multi-month lows after a US Federal Reserve official hinted at potential interest rate cuts. The two-year yield hit its lowest point since mid-July at 4.6%, while the benchmark 10-year yield fell to its lowest level since September at 4.23%.
FIIs remain net buyers: Foreign institutional investors (FIIs) bought Indian shares worth Rs 1,589 crore on Friday, while domestic institutional investors sold shares worth Rs 1,448 crore. In November, FIIs ended a two-month selling streak by adding stocks worth Rs 9,001 crore.
Crude oil below $80: Oil futures fell today due to geopolitical tensions in the Middle East, which raised concerns about supply from the region. However, uncertainty surrounding OPEC+ voluntary output cuts and global fuel demand growth has clouded the outlook for the sector. Brent crude futures dropped by 0.5% to $78.36 a barrel, while US West Texas Intermediate crude futures were down 0.6% at $73.62 a barrel.
Rupee strengthens: The Indian rupee strengthened by 6 paise to reach $83.27 against the US dollar in early trade. This was supported by a decline in US Treasury yields following comments from Federal Reserve Chair Jerome Powell and the ruling party’s victories in the state elections. The dollar index, which measures the greenback against a basket of six major world currencies, rose slightly by 0.03% to 103.29.