Sensex rises nearly 600 points: What's behind today's rally?
What's the story
India's equity benchmarks, the Sensex and Nifty, opened on a positive note on Monday. At the time of writing, the Sensex was up by 584 points to 78,348, while the Nifty hit 24,439 mark, up by 169 points. The upward movement was mainly driven by strong quarterly business updates from major private lenders such as HDFC Bank and Axis Bank. The rise in foreign institutional investors' (FII) buying also contributed to the market's performance.
Bank reports
HDFC Bank's gross advances rose by 15.4%
HDFC Bank, India's largest private lender, reported a 15.4% rise in gross advances for the June quarter. The bank's period-end deposits also saw a significant increase of 14.7%. Axis Bank and Kotak Mahindra Bank followed suit with an 18.8% growth in gross advances and a net loan growth of 15.1%, respectively. These strong numbers have boosted investor confidence and contributed to the market's upward movement today.
Additional reports
IndusInd Bank's net advances fell by 2.3% YoY
IndusInd Bank also reported a sequential growth of 3.3% and 3.8% in net advances and deposits, respectively, for the June quarter. Compared to the year-ago period, advances were down 2.3%, while deposits rose 4.5%. The Bank Nifty outperformed benchmarks by rising 0.65%, with high-weight banks and financials rising by up to 2.5%.
Expert opinions
CLSA on bank results
Piran Engineer, a senior research analyst at CLSA, said most banks that reported June quarter provisional numbers have met or exceeded their estimates. However, he noted Kotak and RBL were exceptions. He also stressed the need to monitor the granularity within loan book expansion and potential impact of declining CASA ratios on margins.
Market factors
Foreign inflows encourage investors
Investors were also encouraged by foreign inflows of ₹1,355 crore on Friday. This marks a third consecutive session of net buying. The fall in crude oil prices below $72 per barrel is also expected to encourage foreign investors to buy into India. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, said these factors could lead to further foreign investment in the Indian market.
Market forecast
Nifty outlook for the short term
From a technical perspective, Rajesh Palviya, Head of Research at Axis Direct, said the trend remains constructive as long as Nifty stays above the 24,150 breakout zone. He added that a sustained move above 24,400 could pave the way toward 24,600. However, if it breaches below this level it may trigger profit booking toward the 24,000 mark.