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Market Soars: Sensex Surges 1,400 Points Ahead of Earnings Season, Driven by Auto and IT Stocks

February 28, 2025
Smart Money

BSE Sensex Rallies 1,400 Points, Nifty50 Crosses 24,150 on Strong Market Performance

In a robust trading session on Thursday, the benchmark BSE Sensex experienced a significant rally, gaining 1,436 points or 1.83%, to close at 79,943. Meanwhile, the broader NSE Nifty50 also performed well, ending the day at 24,188 with an increase of 446 points or 1.88%. This growth marks a decisive turnaround for the indices, which momentarily saw the Sensex surge over 1,500 points and the Nifty reclaim the 24,200 level during the trading day.

Market Capitalization and Sectoral Gains

The impressive rise in the indices was accompanied by a jump in the market capitalisation of all listed companies on the BSE, which increased by Rs 5.89 lakh crore, bringing the total to Rs 450.32 lakh crore. A green wave washed over all major sectoral indices, with Nifty Auto, Financial Services, IT, and Consumer Durables being the front-runners of today’s market rally. These sectors saw gains ranging from 1.5% to 3.8%.

Key Factors Driving the Rally

Several factors contributed to the day’s impressive market performance:

1. Strong December Auto Sales

Auto stocks took center stage, propelled by unexpectedly positive December sales figures. Eicher Motors was a standout performer, seeing an 8.5% jump in its shares after reporting a 25% year-on-year increase in Royal Enfield sales for December, totaling 79,466 units compared to 63,887 units last year. Likewise, Maruti Suzuki shares surged 5.6% as the company achieved a 30% rise in sales for the month, with 178,248 units sold against 137,551 units in December of the previous year. Other notable performers included Mahindra & Mahindra and Ashok Leyland, which recorded gains of 4% and 6.2%, respectively, bolstered by robust sales figures that exceeded market expectations.

2. Rise in IT Stocks

The IT sector, the second-largest segment following financials, recorded a gain of 2.3%. Analysts from CLSA and Citi expressed optimism about the IT sector’s revenue growth prospects for the December quarter and beyond, leading to a rally of major IT stocks. Key players such as Infosys, TCS, HCL Technologies, and Tech Mahindra collectively contributed over 360 points to the Sensex.

3. Economic Recovery Signs

Analysts at Bernstein have indicated that the Indian economy may have bottomed out, with growth anticipated to pick up in the coming one to two quarters. They reported a 5% growth in the previous quarter, despite low industrial growth, and emphasized the importance of strategic investments as the economy finds its footing. Bernstein revised its target price-to-earnings multiple to 19.5x for the two-year forward EPS, projecting an ambitious year-end Nifty 50 target of 26,500, which indicates a potential upside of 12% for the year.

4. Rebound in Banking and Financial Stocks

Banking and financial stocks also exhibited a strong rebound, led by Bajaj Finserv and Bajaj Finance, which saw respective gains of nearly 8% and 6.5%. Other private banks, including HDFC Bank, Kotak Mahindra Bank, and IndusInd Bank, added to this positive momentum, contributing significantly to the indices’ rally.

5. Expiry Day Trading Activity

Thursday marked a weekly options expiry, which often leads to increased trading activity. The Nifty had been trading within a defined range of 23,900 to 23,500 over the past two weeks. However, Thursday saw a decisive breakout above the upper band of this range, stimulated by robust buying activity, further enhancing market sentiment.

Conclusion

The significant rally in the Indian stock markets reflects robust performance across several key sectors, driven by strong fundamentals and positive economic signals. With the quarterly earnings season approaching, investors and analysts will be keenly observing how these trends develop as the markets continue their upward trajectory.