Sensex surges over 1,300 points: What is driving today's rally
What's the story
India's benchmark indices, the Nifty and Sensex, surged sharply on Monday.
By 11:00 am, the Sensex had jumped 1,342 points or 1.7% to 80,459 while the Nifty gained 437 points or 1.8% to 24,344.
The market rally was driven by the BJP-led Mahayuti Alliance's landslide victory in Maharashtra and positive cues from Asian and US markets. A dip in foreign outflows also aided the upward momentum.
Market response
Maharashtra election results boost market sentiment
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said the Maharashtra election results have improved market sentiment. This is further strengthened by a decline in FII selling and strong liquidity.
Bathini advised investors to watch out for foreign outflows, which are likely to slow down as FIIs head toward their December holiday period.
"If FIIs turn net buyers, we could witness a strong rally," he added.
Sector performance
PSU bank, realty, auto indices lead market rally
The PSU Bank, Realty and Auto indices led the market rally in early trade, gaining as much as 4%.
Stocks like SBI, Bank of Baroda, PNB and Canara Bank lifted the index. Bathini said this buying interest in banking stocks was due to their attractive long-term relative valuations.
Auto giants like M&M, Maruti Suzuki and Tata Motors also contributed a lot to these gains.
Stock highlights
Reliance Industries, Zomato shares see significant rise
In the opening trade, Reliance Industries topped the gainers with its shares surging nearly 3% to ₹1,299. The surge came after Citi pointed out a favorable risk-reward scenario for the company.
Food delivery giant Zomato also witnessed a 6% jump in morning trade after it received shareholder approval to raise up to ₹8,500 crore through Qualified Institutions Placement (QIP).
Market outlook
Broader market reflects robust trends, geopolitical factors considered
The broader market, including mid-small cap indices, mirrored the robust overall trends with gains of 1.6% each.
However, despite potential short-term gains, sustainability depends on foreign investor activity influenced by geopolitical developments and US treasury yields.
"Even as we see a bounce back, volatility will likely remain high as we wait for more clarity on geo-political tensions between Russia and Ukraine and Donald Trump assuming office," says Sanjeev Hota of Sharekhan by BNP Paribas.