The Nifty surged 206.90 points, or 1%, to close at 20,096.60. The Sensex advanced 727.71 points, or 1.10%, to close at 66,901.91. Automobiles, banks and IT stocks were the top gainers with Axis Bank surging 3.9%, M&M rising 3.4% and Wipro moving up 2.3%.
Both indices have gained close to 5% in the past month.
“Market sentiments have improved after the Fed indicated that rates have peaked, and no further hike is likely,” said Sidhartha Khemka, head of retail research, broking and distribution, Motilal Oswal. “Foreign investors turning net buyers and liquidity flow in IPOs are also positive developments.” So far in November, foreign portfolio investors (FPIs) have bought stocks worth ₹4,687 crore after selling to the tune of an aggregate ₹39,000 crore in September and October.
Indices 0.6% Away from All-time Highs
Khemka said the bullish momentum in the Sensex and Nifty is likely to continue in the near term. Both indices are about 0.6% away from their all-time highs.
The rebound in the stock market came in the wake of the weakening of the dollar, a decline in US treasury yields and easing worries about geopolitical conflict. Brent crude futures, which have fallen nearly 3% in the past month, stood at $82.84 per barrel on Wednesday. “Cooling off of crude oil prices and an expectation of rate cut by the Fed are some of the global factors that have boosted the markets above the 20,000 mark,” said Pankaj Pandey, head of research, ICICI Direct. “Corporate earnings including BFSI (banking, financial services and insurance) have shown 30% growth and the margin profile for large caps also looks good.”
Elsewhere in Asia, markets ended weak with China falling 0.56%, Hong Kong declining 2.1%, and South Korea and Indonesia ending marginally lower. Taiwan advanced 0.17%.
The pan-Europe index Stoxx 600 was up 0.43%. In US, the Dow Jones Industrial Average was up 0.10%, the S&P 500 was up 0.13% and the Nasdaq Composite was up 0.08% at the time of going to press. The broader Indian market also witnessed new records with the BSE’s midcap and small-cap indices rising 0.8% and 0.4%, respectively, to all-time highs.
Investors are, however, cautious about the prospects of smaller shares as many of them appear overbought after the scorching rally so far in 2023. Analysts are advising clients to cut exposure to mid- and small-cap stocks and shift to large caps.
Pandey said the rally is expected to be sustained with the Nifty likely to hit 21,500 in the next 12 months.
“Corporate earnings are likely to grow, with the next two quarters expected to deliver strong results,” he said. “Foreign inflow after three months of outflow provides a vantage point to large-cap stocks as well.”
