Share Market Rise: Indian stock markets witnessed a strong rise on Friday, January 2. Sensex jumped by 500 points during trading. Whereas Nifty increased to near 26,300. Strong signals from global markets and return of buying in large-cap stocks strengthened the market sentiment. BSE midcap and smallcap indices also jumped up to 0.72 per cent. Barring FMCGs, almost all the main sectoral indices were also trading in the green. Maximum buying was seen in utility, auto, power, PSU bank and metal shares.
At around 12:30 pm, the Sensex rose 475.51 points or 0.56 per cent to 85,664.11. Nifty was trading at 26,300.30, up 153.75 points or 0.59 percent.
There were 5 big reasons behind today’s rise in the stock market-
1. Strong signals from global markets
The first major reason behind the rise in stock markets were the strong signals from global markets. In Asian markets, South Korea’s Kospi, Shanghai’s SSE Composite and Hong Kong’s Hang Seng index were trading with gains. Apart from this, the US futures market also appeared strong by 0.7 percent, which gave hope of a good start on Wall Street.
2. Buying large cap stocks
Buying was seen returning in large-cap stocks on Friday. Especially the shares of Reliance Industries were seen trading with a rise of about 1 percent for the second consecutive day. “Monthly sales data from auto companies as well as business updates from other sectors are indicating improvement in December quarter earnings, which is supporting the market,” G Chokkalingam, founder and head of research at Equinomics Research, told Reuters.
3. Buying by domestic institutional investors
The market got support from continuous buying by domestic institutional investors (DIIs). “Continued inflows from domestic investors are supporting the market in a big way, which is helping to offset the impact of selling by foreign investors,” said Ponmudi R, CEO, Enrich Money.
4. Strength in rupee
In the currency market, the Indian rupee strengthened by 6 paise to reach the level of 89.92 against the US dollar on Friday. According to market experts, the Reserve Bank of India is protecting the level of 90. However, due to the outflow of foreign funds, the rupee is expected to remain in a limited range going forward.
5. Rise in auto stocks
After the sales figures for the month of December came out, there was a spectacular rise in auto stocks today. Nifty Auto index rose almost 1 percent. This index is in the green for the fourth consecutive day. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, says that the 25.8 percent year-on-year increase in passenger vehicle sales in December has given strong signals for the auto industry. He said that the direction of the market will largely depend on whether this growth momentum in the economy continues or not.
What signals are coming from technical charts?
According to Devarsh Vakil, Head of Prime Research at HDFC Securities, if Nifty manages to hold above the 26,234 level, it could signal a breakout from the current consolidation phase and pave the way for retesting the record highs. He said that the level of 25,900 can currently act as a strong support for Nifty in the short term.
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