Nifty near 17,700, Sensex jumps over 1200 points: 5 factors driving the rally on Dalal Street today

Amid muted global cues, the Indian market surged more than two per cent on Tuesday afternoon. The rally was led by sectoral indices. The broader Nifty 50 was seen attempting 17,700 as the index touched the day's high of 16,771. The Sensex rallied over 1200 points to trade at 59,208.96.  

The rally in Indian market was largely due to Foreign Institutional investors, stability in crude oil prices and support from sectoral indices, especially Auto, Banks, Financial Serviecs and IT.  

Even though Asian markets largely traded in negative in the afternoon trade on Tuesday, the Indian market rose more than two factors—Here are the factors aiding the rally 

Foreign Institutional investors (FIIs): Foreign investors have been infusing funds in the Indian market despite volatility across global markets amid inflation concerns and rate tightening. FIIs bought equities to the tune of Rs 17,859.76 crore in the Indian market so far in August.  

Bullishness on Indian market, economy: Giving a thrust to the already surging market, Economic Advisory Council to the Prime Minister (EAC-PM) Chairman Bibek Debroy on Tuesday said Indian economy's size will touch USD 20 trillion by 2047. He said it can be achieved provided the Indian economy grows annually by 7-7.5 per cent in the next 25 years. 

Releasing 'The Competitiveness Roadmap for India@100', Debroy also said the country's annual per capita income will be over USD 10,000 if the country grows at an average economic growth rate of 7-7.5 per cent in the next 25 years. 

Speaking about Indian market, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said compared to the sell-off in US markets last Friday, the correction in the Indian market on Monday was relatively mild. "This is a reflection of the resilience of the Indian market," he said.  

Support from sectoral indices: The rally on benchmarks was ably aided by buying interest in sectoral stocks. The rally was driven by Auto, Bank, Financial services, Realty and IT stocks as all indices traded in the green. Auto index surged almost three per cent anticipating strong August sales data in view of upcoming festive seasons. Besides, the IT index also bounced back after declining by around two per cent in a week time. Nifty Realty was the top gainer among sector index, surging by around three and half per cent.  

Technical: The Nifty index reclaimed 17,500 rather comfortably, setting the tempo for the day.  

"The downsides lost momentum on tests of the 17160 region triggering upside attempts on anticipated lines. This ideally aims for the 17800-520 region, but expect bears to resurface on approach to 17500-520. Downside marker may be placed at 17250, but it is the performance in the 17450-520 region that will set the mood today," said Anand James - Chief Market Strategist at Geojit Financial Services. 

Stable oil prices: Oil prices were stable on Tuesday as the market balanced supply concerns with fears that an inflation-induced weakening of global economies would soften fuel demand, said Reuters. Brent crude futures for October settlement fell 9 cents, or 0.09%, to $105 a barrel by 0841 GMT, after climbing 4.1% on Monday, the biggest increase in more than a month. The October contract expires on Wednesday and the more active November contract was at $103.03a barrel, up 0.1%.