Sensex, Nifty Surge Over 1.6% as Q2 Earnings and Foreign Buying Fuel Rally
Indian equity markets surge as Sensex and Nifty gain over 1.6%, driven by strong Q2 earnings and foreign investor buying.
Indian equity markets witnessed a powerful surge on Monday, with the Sensex Nifty rally driving indices up by more than 1.6 per cent. This sharp climb was triggered by a combination of better-than-expected second-quarter earnings, strengthening domestic economic indicators, and a shift in global investor sentiment as foreign funds turned buyers amid a rotation in artificial intelligence-related stocks.
The Nifty 50 index closed at 23,440.80, marking a gain of 387.70 points or 1.68 per cent. Similarly, the BSE Sensex settled at 75,692.78, jumping 1,233.25 points, an increase of 1.66 per cent.
Key Drivers Behind the Market Jump
According to Vinod Nair, Head of Research at Geojit Investments, the strong start to the week was underpinned by corporate performance and a resilient domestic economy. Several factors contributed to the positive sentiment:
- Corporate Earnings: Q2 results surpassed market estimates, boosting investor confidence.
- Domestic Demand: Healthy festive demand was evident in October's passenger-vehicle sales growth.
- Fiscal Strength: An increase in gross GST collections highlighted the robustness of domestic consumption.
- Global Cues: Diplomatic efforts between the US and Iran, coupled with softer crude oil prices, helped ease geopolitical risks and energy cost concerns.
The rally was not limited to large-cap stocks; mid- and small-cap equities also saw gains, signaling broader market participation.
Sectoral Performance: Winners and Losers
The gains were uneven across sectors, with metals and PSU banks leading the charge on the NSE.
Top Performing Sectors:
- Nifty Metal: Led the gains with a 2.8 per cent rise.
- Nifty PSU Bank: Advanced by 1.19 per cent.
- Nifty Auto: Gained 1.05 per cent.
- Nifty Realty: Rose by 0.80 per cent.
- Nifty FMCG: Increased by 0.4 per cent.
Sectors in the Red:
Conversely, the technology and banking sectors faced pressure. Nifty IT declined by 0.8 per cent, followed by Nifty Media at 0.7 per cent. Nifty Private Bank lost 0.40 per cent, and Nifty Pharma slipped by 0.32 per cent.
Among individual Nifty 50 stocks, Reliance Industries, Tata Steel, JSW Steel, and Shriram Finance emerged as the top gainers. On the flip side, Infosys, ICICI Bank, HDFC Life, Kotak Mahindra Bank, and Axis Bank were the major laggards.
Commodities and Currency Movements
The commodities market saw a significant drop in energy costs, with Brent crude oil prices falling more than 4 per cent to USD 108.54 per barrel. While this is a decline from the previous week, prices remain above long-term averages.
In precious metals, gold remained weak at Rs 1,38,420 per 10 grams for 24-karat gold, while silver climbed 1.65 per cent to reach Rs 1,82,094 per kg.
Rupee Under Pressure
Despite the equity rally, the Indian rupee weakened by 21 paise, closing at 94.97 against the US dollar, compared to Friday's 94.76. Rajeev Sharan, Head of Research at Brickwork Ratings, attributed this to a firm dollar index and an AI-led selloff in US tech stocks affecting Asian currencies.
Interestingly, while headline RBI reserves fell for the seventh consecutive week to USD 719.75 billion (due to a USD 2.65 billion gold-valuation loss), foreign currency assets actually rose by USD 1.36 billion. Sharan noted that foreign investor buying in Indian equities and lower crude prices are providing a necessary cushion for the rupee.
Global Market Context
While India rallied, other Asian markets showed mixed results:
- South Korea: KOSPI advanced by more than 2 per cent.
- Hong Kong: Hang Seng gained 0.26 per cent.
- Japan: Nikkei 225 declined 0.12 per cent.
- Taiwan: Weighted index lost 0.65 per cent.
- Singapore: Straits Times fell 1.37 per cent.