Marvellous Monday! Nifty gains around 2%, Sensex nears 72,000; top factors behind today's stellar rally

Share market news: Indian equities in Monday’s trade (January 29) gained ground ahead of key events lined up this week. At the day’s high, BSE Sensex scaled to levels of 71,965.28, up nearly 1,264.61 points, or 1.79 per cent, while Nifty advanced to 21,745.6, up 1.84 per cent or 393 points. Meanwhile, Bank Nifty also gained substantially.

"The latest breakout in the oil and gas index has propelled the sector into positive territory. The recent consolidation in the Nifty Oil and Gas index concluded with an upside breakout, indicating increased optimism in the space that may persist in the coming days. Therefore, the sudden surge in energy stocks might continue to bolster the headline index in the short term,” said Rupak De, Senior Technical Analyst, at LKP Securities.

Index heavyweight Reliance Industries (RIL) hit an all-time high of Rs 2,904.30 on the BSE today. The stock jumped as much as 7.1 per cent.

Here are the likely factors responsible for today’s sharp gains on equity indices.

Recovery in financials: Beaten-down stocks from the financial space showed impressive recovery in today’s session. Shares of HDFC Bank posted decent gains of nearly 2 per cent and scaled to levels of Rs 1,462.85 at the day’s high after the apex bank RBI allowed LIC to increase its stake in the private lender. As per a Reuters report, since the lender’s weak December quarter results, financials have lost over 6 per cent in the last seven sessions.

Sharp gains in PSU stocks: Nifty PSE index, a barometer of the performance of public sector companies, buzzed in trade today with commendable gains of over 3 per cent, with ONGC, PFC, REC, and NHPC, among others, leading the gains.

Many analysts are banking on the space as the BJP's coming to power in the upcoming elections is viewed as a done deal, and in this backdrop, the market is hopeful that the ongoing infrastructural capex, ‘Make in India’ in the manufacturing sector, and defence indigenisation, among others, will be further strengthened.

GDP growth estimated over 7 per cent by 2030: In its economic review for January, the Finance Ministry mentioned that the strength of domestic demand has driven the economy to a 7 per cent plus growth rate in the last three years. Accordingly, in FY25, real GDP growth will likely be closer to 7 per cent. There is, however, considerable scope for the growth rate to rise well above 7 per cent by 2030.

Broad-based buying: Buying in the stocks was broad-based, with all the sectors trading in green. Sectors, including energy, banks, financial services, metal, and auto, posted gains between 1-4 per cent. Meanwhile, the broader market also traded in the green, with the smallcap and midcap indices trading with gains of over 1 per cent.

Fed meeting: The FOMC meeting is scheduled between January 30 and January 31. While the market expects the US Federal Reserve to keep rates steady at 5.25–5.5 per cent, the FOMC has signalled several rate cuts throughout 2024 amid a slowing economy and softer inflation. V.K. Vijayakumar, Chief Investment Strategist, at Geojit Financial Services, said no rate cut is expected, but the commentary will be keenly watched.

Positive Asian markets: Asian markets mostly traded in the green as new measures by the Chinese government to stabilise the local market bolstered the sentiment, which took a hit from the liquidation of China’s real estate giant, Evergrande. Japan’s Nikkei rose 0.77 per cent, Hong Kong’s Hang Seng went up by 0.66 per cent, and South Korea’s Kospi buzzed with 0.9 per cent gains.