Sensex climbs 460 points: Key factors behind stock market rally

NEW DELHI: Bank and financial stocks continued to be in demand in Tuesday's session taking benchmark indices higher while RIL and Bharti Airtel were among the biggest drags. Firm global cues also helped boost sentiments.

Meanwhile, the Supreme Court said it will hear the loan moratorium on Nov 5 , which many believe will be in the favour of banks, leading to buying in these counters. However, any adverse order can set off a selling.

“The Nifty is trading above the 11,750 mark and if we can sustain that, it could be used as a stop loss for all short positions on the index. We would need to wait for more clarity before we can go long on this market. Should a buy get triggered on the upside, 12,200-12,300 can be expected,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.

Factors driving markets

• US elections: Some sort of certainty has started creeping in the minds of investors as the US goes to polls later in the day. Strategists at Blackrock Investment Institute said polls were suggesting a greater likelihood of a Democratic sweep in the election.

• Economic activity improves: US manufacturing activity accelerated more than expected in October, with new orders jumping to their highest in nearly 17 years, while Chinese factory activity expanded the fastest in a decade and eurozone manufacturing also sped up.

• US Fed meet: The Federal Open Market Committee (FOMC) will begin its two-day meeting on interest rate policy on Wednesday, with policymakers expected to reaffirm its commitment to support the pandemic-struck economy and keep interest rates unchanged.

• Covid non-stop: Italy will join the host of European countries tightening Covid-19 restrictions amid surging cases, hospital admissions and deaths, while reports showed new pandemic cases hit record highs last week in the United States.

How are bluechips doing
After opening in the green, benchmark indices strengthened their lead. At 10.53 am, BSE flagship Sensex was up 459.04 points or 1.15 per cent at 40,216.62. NSE benchmark Nifty followed and rose 136.60 points or 1.17 per cent to 11,805.75.

In the 50-share pack Nifty, ICICI Bank was the biggest gainer for the second day, up 3.56 per cent. HDFC, Tata Motors, Hero Moto, BPCL, SBI, HDFC Bank and Eicher Motors were among other gainers.

Adani Ports was the top loser in the pack, down 1.64 per cent. Bharti Airtel, Infosys, UltraTech Cements, NTPC, Asian Paints, HUL and Reliance Industries were among other names that opened with cuts.

Broader markets
Broader market indices also saw buying but underperformed their headline peers in morning trade as Nifty Smallcap rose 0.67 per cent while Nifty Midcap added 0.77 per cent. Broadest index on NSE, Nifty 500 was up 0.97 per cent.

Crompton Greaves, Jindal Steel, RBL Bank, Amber Enterprises, Rashtriya Chemicals and Fertilisers and Indian Bank were among major gainers from the space while Welspun India, Alok Industries, Persistent Systems, Edelweiss Financial, Godrej Properties and Vodafone Idea were under selling pressure.

Global markets
MSCI's broadest index of Asia-Pacific shares outside Japan added 1 per cent, up for the second straight day. The gauge is just 1 per cent shy of a 2-1/2 year high struck in mid-October and up 5 per cent so far this year.

South Korea's main index advanced 1.7 per cent, markets in Hong Kong and Sydney rose 2 per cent and Chinese blue chips put on 0.8 per cent. Japanese markets were closed for a holiday.

US stock futures traded higher, even though many market participants expect short-term volatility, especially after a jittery week. S&P 500 futures rose 0.5 per cent, EURO STOXX 50 futures gained 1 per cent and FTSE futures put on 0.9 per cent.

What to expect

• Moratorium case: Investors will keep an eye on hearing in the Supreme Court as any adverse judgment will hurt banks.

• US elections: US is scheduled to vote for the Presidential election on Tuesday, which will be keenly tracked by investors.

• Q2 earnings: Dabur, Muthoot Finance, PVR and Sun Pharma were among the top names that will come out with their numbers.