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The Indian equity markets experienced a significant rebound on Thursday, with the Sensex nearing 82,000 and the Nifty exceeding 24,740. This surge was primarily driven by renewed buying interest in heavyweight stocks, particularly within the IT sector. The recovery, amounting to approximately 1,500 points from the day's low for the Sensex, was fueled by a confluence of factors, both domestic and global. A key catalyst was the positive commentary from US Federal Reserve Chairman Jerome Powell, who highlighted the resilience of the US economy. This upbeat assessment significantly impacted global sentiment, encouraging investors to embrace riskier assets like equities. The strong performance of IT giants such as TCS, Infosys, Wipro, and Tech Mahindra underscored this global shift in investor confidence. Their substantial gains reflected the improved global outlook and robust Foreign Institutional Investor (FII) activity. The market's broad-based recovery, encompassing various sectors, further solidified the impression of renewed investor faith in blue-chip stocks.
Another significant contributor to the market's upward trajectory was the substantial inflow of funds from Foreign Institutional Investors (FIIs). After months of net selling, FIIs have reversed course in December, demonstrating a marked change in their investment strategy. Their purchases totaled Rs 1,798 crore on Wednesday, following a net purchase of Rs 3,665 crore on Tuesday. This surge in FII investment, amounting to Rs 5,224 crore in December alone, represents a dramatic turnaround from the significant net outflows witnessed in October and November (Rs 1.6 lakh crore). This reversal indicates a shifting global perception of the Indian market, potentially driven by improving economic indicators and growth prospects. Experts like Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, attribute this change to FIIs unwinding their short positions and a growing optimism for the second half of the fiscal year. This influx of foreign capital provided essential liquidity, contributing substantially to the market's buoyancy.
The upcoming Reserve Bank of India (RBI) monetary policy decision on Friday also played a crucial role in shaping investor sentiment. While a rate cut is not anticipated, the market remains optimistic about the potential for dovish guidance from the RBI. This expectation of a less hawkish stance is contributing to the overall bullish sentiment, especially within the banking sector. Public sector banks (PSUs) witnessed particularly strong gains, with the Bank Nifty index approaching its all-time high. This reflects the market's confidence in the resilience of the Indian banking sector and its prospects for growth. Analysts are pointing to buy signals for several stocks across various sectors, including Lupin, HDFC Bank, and Aurobindo Pharma, further reinforcing the positive market outlook. The continued strong buying interest in IT stocks, alongside the encouraging signals in other sectors, suggest a broad-based confidence in the Indian economy's future performance.
The positive trend in the Indian markets is not an isolated phenomenon; it mirrors a broader global risk-on sentiment. The Dow Jones Industrial Average recently surpassed the 45,000 mark for the first time, reflecting robust economic growth and cooling inflation in the United States. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the significant impact of Jerome Powell's comments on the US economy's 'remarkably good shape.' These comments served as a major catalyst for US markets and, in turn, provided a strong impetus to the global equity market rally, including the Indian markets. The convergence of positive global macroeconomic indicators and a renewed optimism about the Indian economy's growth prospects are crucial elements in explaining the robust performance of the Indian equity markets on Thursday. The market's impressive rebound underscores the interplay of international and domestic factors influencing investor sentiment and driving market movements.
It's important to note that while market indicators are currently positive, the situation is dynamic and subject to change. The analysis presented here should not be considered investment advice. Any investment decisions should be made after careful consideration and consultation with qualified financial professionals. The information presented represents a snapshot of the market's state at a specific point in time and should not be taken as a predictor of future performance. Understanding the risks involved in market fluctuations is crucial for any investor, regardless of the current market trends.
Source: Why Markets Are Rising Today? Key Factors Behind Surprise Rebound In Nifty, Sensex Today