Sensex, Nifty rise a percent each; 5 factors that have triggered buying in the market

The Indian market witnessed healthy buying in the morning trade on November 3 with the benchmarks Sensex and Nifty logging gains of a percent each as investors lapped up shares banking and financial heavyweights.

At 1005 hours, the Sensex was 307 points, or 0.77 percent, higher at 40,064 while the Nifty was at 11,768, up 99 points, or 0.85 percent.

The BSE midcap and smallcap indices were 0.63 percent and 0.68 percent higher at that time.

Among the sectors, BSE finance, healthcare, auto, Bankex, consumer durables and metal rose over a percent each. BSE Telecom, however, failed to perform and fell over a percent following losses in shares of Bharti Airtel and Vodafone Idea.

Market LIVE Updates: Indices trade higher with Nifty around 11,800; banks, metals shine

Here 5 key factors that triggered buying in the market:

Positive Asian peers

The Indian market rose in sync with major Asian peers as investor sentiment got a boost by strong factory output data from major economies.

As per Reuters, 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.

Improving macro meter

Giving a boost to the hope that the economy is coming back to track, India’s factory activity expanded at its fastest pace in over a decade in October as demand and output continued to recover strongly from coronavirus-related disruptions but firms cut more jobs, a private survey showed.

The Nikkei Manufacturing Purchasing Managers’ Index compiled by IHS Markit, rose to 58.9 in October from September’s 56.8. The reading was the highest since May 2010 and above the 50-level separating growth from contraction for the third straight month.

Banks, financials rally

Bank stocks have a high weightage in the Sensex. Gains in shares of banking and financial heavyweights, such as ICICI Bank, HDFC twins, Axis Bank, State Bank of India and Bajaj Finance lifted the benchmarks higher.

Shares of banking heavyweights have been witnessing traction after their September quarter earnings showed that they have held up well during the time of the coronavirus pandemic.

In-line Q2 earnings 

The September quarter earnings, so far, have been along expected lines and have even beaten market expectations in some cases. This has triggered sector and stock-specific buying as investors expect the upcoming quarter numbers to be even better, with the economy heading towards normalcy.

Technical factor

In the previous session, the Nifty, on the weekly chart, sustained above the long-term trend line support at around 11,600 levels after the intraday violation.

"Having placed on this significant trend line support as per the concept of change polarity, one can't rule out a possibility of an upside bounce in the market," said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

"The short-term trend of the Nifty is range-bound with positive bias. The daily/Intraday chart pattern signals the possibility of an upside breakout attempt of 11,750 levels in the next one-two sessions. On the upper side, 11,800-11,850 is going to be the next resistance. Immediate support is placed at 11,550," Shetti said.