Sensex jumps 600 points to create 2 new records! 5 factors behind the boom

Sensex jumped over 600 points on Monday to scale fresh all-time high of 74,869, while Nifty touched a new peak near the 22,700-milestone. In the process, the combined market capitalisation of all listed stocks on BSE rose by Rs 1.3 lakh crore to cross the Rs 400 lakh crore mark for the first time as most of the gain in market value was led by bluechips.

The upside seen in today's session defies the traditional theory that when bond yields rise, stocks fall.

The 10-year Indian government bond yields rose to 7.1438%, mirroring a jump in US Treasury yields after strong economic data further pushed back expectations around the timing of the first rate cut by the Federal Reserve.

US 10-year yield was hovering around 4.44%, its highest level in over four months, while the two-year yield, a closer indicator of interest rate expectations, was also at an over four-month high of around 4.78%.

Also read | New record on Dalal Street! India market cap hits Rs 400 lakh crore for first time

Back on Dalal Street, mid and smallcap indices underperformed as auto, metal and realty stocks led the upside. Eicher Motors, Maruti Suzuki and M&M rallied 3-5% each, while heavyweight Reliance was also trading around 2% higher.

Here are 5 key factors leading the upside in Sensex, Nifty today:

1) Global markets
Nasdaq and S&P500 ended over 1% higher on Friday after 303,000 jobs were created in the United States in March, with investors focusing on the positives for the economy instead of the monetary policy implications.

The spillover effect was seen in other Asian markets today with Hong Kong, Tokyo, Sydney, Seoul, Singapore, and Taipei rising.

2) Crude oil
Crude oil prices slid over $1 a barrel on Monday, with Brent falling below $90, as Middle East tensions eased after Israel withdrew more soldiers from southern Gaza and committed to fresh talks on a potential ceasefire in the six-month conflict. Brent crude futures dropped $1.48, or 1.6%, to $89.69 a barrel.

3) Institutional buying
The upside in Nifty heavyweights is believed to be due to buying by institutional investors, FIIs in particular. Foreign investors, who had bought Indian stocks worth around Rs 35,000 crore last month, were net buyers to the tune of Rs 1,700 crore on Friday.
Retail investors have anyways been supporting the market in this leg of the bull run.

4) Impact of business updates
Ahead of the release of the quarterly report card, companies have started to announce Q4 business updates - the impact of which was seen in many stocks.

Shares of Info Edge were trading 9% higher on reporting robust Q4 performance, Voltas was trading 7% up after announcing sales of 20 lakh units of air conditioners in FY 2023-24. Nykaa rose 6% after telling shareholders that it expects revenue growth for the quarter to be in the high twenties on a YoY basis.

5) Earnings expectations
With the March quarter earnings season kicking off this week with TCS declaring numbers on March 12, investors are fine-tuning portfolios in sync with expectations around results. Motilal Oswal expects Nifty earnings to grow 6% YoY during the quarter while Kotak Equities is expecting 4% YoY growth.

"Overall earnings growth is anticipated to be driven, once again, by domestic cyclicals, such as Auto and BFSI, which are expected to post 20% and 15% YoY growth, respectively. Conversely, earnings growth is expected to be weighed down by global cyclicals, such as O&G and Metals, which are anticipated to decline 6% and 12% YoY, respectively," Motilal said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)