Market ends at over 9-month high; 5 factors that supported the rally

The market extended gains for the fifth consecutive session with the Nifty50 closing more than 9-month high on November 6.

At closing, the BSE Sensex rallied 552.90 points, or 1.34 percent, to 41,893.06, while the Nifty50 jumped 143.20 points, or 1.18 percent, to 12,263.50, the highest closing level since January 17, 2020 after hitting an intraday high of 12,280.40.

The benchmark indices around 1 percent away from previous record high levels seen in January this year.

But the broader markets underperformed benchmark indices, with the Nifty Midcap and Smallcap indices rising over half a percent each.

Here are 5 factors that are supporting the market rally:

FII Flow

Foreign institutional investors seem to having bullish view on the market as they remained net buyers in every session in November so far.

They net bought Rs 8,529.54 crore worth of shares in November, on top of Rs 14,537.40 crore in October, though they remained net sellers for the calendar year 2020.

US Election-led Rally in Global Markets

Most of global markets also traded in the green amid expectations of Democratic Party winning US election, following 2 percent rally in the US markets overnight.

Reports indicated that Democratic Party's Joe Biden already won 253 electoral votes. The party needs 270 votes to win the White House.

Japan's Nikkei gained 0.9 percent and Australia's ASX 200 rose 0.8 percent while South Korea's Kospi and Hong Kong's Hang Seng were flat with a positive bias. However, China's Shanghai Composite was down 0.24 percent.

Sectoral Leaders

Banking and financials stocks were at the driver's seat for recent rally as experts feel the rising hope for easing NPA pressure helped these stocks catch up the momentum where other major sectors - IT, Pharma, Metals, Infra, Auto, Telecom - already participated in the rally.

Nifty Bank and Financial Services indices gained 1.85 percent each.

"The banking industry looks in much better shape unlike what was feared, given the growing collection efficiency, adequate provisioning, and the fresh capital cushion lent to balance sheets," Yes Securities said.

Reliance Industries

The rally in Reliance Industries was one of major reasons behind upside seen in the market. The stock gained 3.8 percent after Saudi Arabia's Public Investment Fund (PIF) will invest Rs 9,555 crore or $1.3 billion in company's subsidiary Reliance Retail Ventures in exchange for a 2.04 percent stake.

With this deal, RIL has so far sold 10.09 percent in Reliance Retail Ventures, India’s largest retailer, for a combined Rs 47,265 crore.

Technical View

The Nifty50 climbed over a percent higher and formed bullish candle on the daily charts. In fact the index has formed bullish candle for fourth consecutive session.

With the index trading at more than 9-month high, experts expect the index to touch its previous record high levels soon.

"12,200 was a resistance level for this month's expiry. We have successfully crossed and closed above that. This should push the Nifty to its next level which is 12,400," Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments told Moneycontrol.

"The macro trend of the index is positive and any dip or correction can be utilised to buy into this market. The Nifty has a very good support at 11,500," he said.