Festive cheer! 4 factors that made investors richer by Rs 5 lakh crore today

Following the overnight rally on Wall Street, the domestic equity market more than made up for yesterday's losses on Tuesday as Sensex rallied over 1,100 points and Nifty was placed above the 17,100 mark. Dalal Street investors tuned richer by Rs 4.75 lakh crore as the market capitalisation of all BSE-listed stocks went up to Rs 272.93 lakh crore.

Since 2011, there have been only two occasions when Sensex has given negative returns in the festive month of October, which also marks the beginning of Q3 and the second half of the financial year.

Here are the key factors charging the bulls ahead of tomorrow's Dussehra holiday:

• Global market booster

The Dow Jones closed up 2.66% on Monday in its biggest one-day advance in over 3 months as investors factored in the possibility that the US Fed might be forced to back away from aggressively tighter monetary policy.

Other Asian markets were also in a festive mood as Japan's Nikkei jumped on Tuesday to its highest in nearly two weeks. Markets in mainland China and Hong Kong are closed for a holiday.

• US manufacturing data

The US manufacturing index fell to a 28-month low of 50.9% in September. The theory that what's bad for the economy is good news for the market left bulls hopeful.

• Bond yields and dollar

In the near term, market sentiments have turned positive with a declining trend in dollar and US bond yields. The US dollar index slipped below the 112-mark. The Indian rupee opened up 0.25% at 81.67. The US 10-year bond yield was trading 0.88% lower at 3.619.

• FII buying

After being net sellers to the tune of over Rs 7,000 crore in September, foreign institutional investors or FIIs bought Indian equities worth Rs 590 crore on the first trading day of Q3 i.e. yesterday.

"If this trend continues, FIIs will again turn big buyers in India and they will not get stocks cheap. Financials and autos are again set to lead the uptrend since their fundamentals and prospects are strong. Capital goods are likely to join the rally and telecom is on a strong wicket," said Dr V K Vijayakumar, Chief Investment Strategist at .

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