Market Rally: Sensex Surges 1,400 Points as Nifty50 Closes Above 24,150 Ahead of Earnings Season
MUMBAI, INDIA – The Indian stock market witnessed a significant surge on Thursday, with the Benchmark BSE Sensex rallying by an impressive 1,436 points, or 1.83%, closing at 79,943. The broader NSE Nifty50 also made substantial gains, ending the day at 24,188 after adding 446 points, representing a rise of 1.88%. This robust performance marks a positive momentum for the markets as they gear up for the upcoming quarterly earnings season, commencing next week.
Throughout the trading session, the Sensex peaked with a gain of over 1,500 points, while the Nifty climbed above the 24,200 threshold. The remarkable performance led to an increase in the market capitalization of all listed companies on the BSE, which jumped by Rs 5.89 lakh crore, bringing the total to Rs 450.32 lakh crore.
Sectoral Leaders Drive Gains
All major sectoral indices closed in positive territory, with notable contributions from the Nifty Auto, Financial Services, IT, and Consumer Durables sectors, all rising between 1.5% and 3.8%. Several factors can be attributed to this favorable market movement:
1. Strong December Auto Sales
Auto stocks emerged as frontrunners in today’s rally, spurred by robust sales data for December that defied typical seasonal trends. Eicher Motors led the charge with an impressive 8.5% increase in stock price, following a 25% year-on-year surge in Royal Enfield sales, with 79,466 units sold in December compared to 63,887 in the same month last year. Maruti Suzuki followed suit, with shares climbing 5.6% after reporting a 30% year-on-year rise in December sales, delivering 178,248 units against 137,551 units from the previous year. Mahindra & Mahindra (M&M) and Ashok Leyland also posted notable gains of 4% and 6.2% respectively, bolstered by better-than-expected sales data.
2. Positive Outlook for IT Stocks
The information technology sector, the second-largest contributor after financial services, saw an uplift of 2.3%. Projections by CLSA and Citi suggesting continued revenue growth for IT firms in the December quarter and into 2025 contributed to this positive sentiment. Major IT players such as Infosys, TCS, HCL Tech, and Tech Mahindra collectively added over 360 points to the Sensex rally today.
3. Economic Optimism
An optimistic report by Bernstein indicates that the Indian economy may have "bottomed out," with expectations for growth resurgence in the forthcoming quarters. They highlighted a 5% growth in September as indicative of a recovery phase, and recommended strategic investments ahead of this anticipated growth, despite some risks to fiscal year 2026 earnings. Bernstein has adjusted its target PE multiple to 19.5x two-year forward EPS and predicts a year-end target for the Nifty50 of 26,500, suggesting a potential return of approximately 12% for 2024. 4. Resurgence in Banking and Financial Stocks
A robust recovery in banking and financial stocks also contributed significantly to the market’s gains. Bajaj Finserv and Bajaj Finance saw impressive increases of nearly 8% and 6.5% respectively, while other major private banks, including HDFC Bank, Kotak Mahindra Bank, and IndusInd Bank, also added to the overall gains.
5. Weekly Expiry Buying Influence
Finally, market dynamics were influenced by the weekly expiry of options. The Nifty has been trading in a well-defined range over the past two weeks, with the upper limit set at 23,900 and the lower at 23,500. Thursday’s decisive breakout above this upper boundary catalyzed renewed buying interest among investors, adding to the day’s gains.
In conclusion, the Indian stock markets experienced a robust rally driven by substantial gains across various sectors, positive economic prospects, and positive corporate sales data. As investors look forward to the upcoming earnings season, market sentiments remain bullish, reflecting confidence in both corporate performance and economic recovery.
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