Rs 3 lakh cr added to investor wealth: Key factors behind market rally

New Delhi: Domestic equity markets opened on a strong note on Thursday thanks to a sharp fall in crude oil prices and firm global cues. Banking and IT heavyweights were the top index contributors.

Investors turned richer by about Rs 3 lakh crore as BSE's total market capitalization reached Rs 2.83 lakh crore as against Rs 2.80 lakh crore on Wednesday.

BSE barometer Sensex was seen marching towards the 60,000-mark whereas NSE benchmark Nifty50 flirted with 17,800 levels during the first half of the trading session.

Here are the factors that pushed the markets higher:

• Fall in crude prices

Crude oil prices are on a downhill and recently traded below the $90 mark in international markets. On Wednesday, crude oil closed at its lowest levels since early February which bodes well for the economies like India which import the majority of their energy requirements.

• Firm global cues

Asian stocks rode a global rally on Thursday, making broad gains as oil prices steadied at lower levels not seen since before Russia's invasion of Ukraine, though China was an exception as weak data signalled more pressure on the COVID-hit economy.

Futures markets pointed to the rally extending in Europe later in the session, despite an expected ECB rate hike and worries about an energy crisis. Euro Stoxx 50 futures rose 0.4 per cent and FTSE futures edged up 0.09 per cent.

Overnight US stocks clocked their best session in nearly a month. Dow Jones surged 1.4 per cent on Wednesday, whereas S&P 500 rallied close to 2 per cent. Nasdaq composite advanced more than 2 per cent during the overnight trade.

• FIIs inflows

Foreign institutional investors (FIIs) remained net buyers in the capital markets, as they purchased shares worth Rs 758.37 crore on Wednesday, despite a weak closing during the previous session. Foreign portfolio investors (FPIs) have poured in Rs 2,646 crore in the domestic equity markets so far in September. In August, the overseas investors poured in Rs 51,204 crore in Indian stocks.

• Strength in rupee

The rupee appreciated 27 paise to 79.68 against the US dollar in opening trade on Thursday, tracking its Asian peers, and easing crude oil prices. At the interbank foreign exchange, the domestic unit opened at 79.72 against the dollar, then touched 79.68 in initial deals, registering a gain of 27 paise over its previous close.

• Bond yields fall

The 10-year US Treasury yield eased to 3.25 per cent earlier in the day, after rising on Wednesday to its highest levels in more than two months. That bodes well for the local bond market.

Indian government bond yields declined in early trades on Thursday, as a sharp drop in global oil prices eased concerns about inflation and further interest rate hikes. The benchmark 10-year government bond yield was at 7.1372 per cent as of 10.15 IST.

• Buying in heavyweights

Strong demand for IT and banking stocks also boosted the morale of investors. Stocks including , and pushed the markets higher as they contributed nearly half of index gains.