On Tuesday, Indian markets saw a strong rally, with the Sensex approaching 58,100 and the Nifty 50 climbing above 17,280. All sectoral indices experienced a bull run, with banking, capital goods, metals, and information technology stocks outperforming the rest. Midcap stocks outperformed small cap stocks, but both baskets saw significant buying. Domestic equities followed positive global cues as they prepared for FY23 second-quarter earnings. The Indian rupee rose against the dollar in the forex market as the greenback fell and treasury yields fell.
Foreign capital inflows have also increased. Meanwhile, crude oil prices have risen in anticipation of the OPEC+ meeting, where an output cut is expected. Investors' wealth increased by more than 5.66 lakh crore in one day due to a bullish stance.
The Sensex rose 1,276.66 points, or 2.25%, to 58,065.47. The index reached an intraday high of 58,099.94. Meanwhile, the Nifty 50 rose 386.95 points, or 2.29%, to 17,274.30. The benchmark has reached a new high for the day of 17,287.30.
On the BSE, the Bankex index increased by 1,188.54 points, while the IT and Capital Goods indices increased by 728.85 points and 713.98 points, respectively. The metal index increased by 612.06 points. Meanwhile, the Bank Nifty gained 1,080.40 points on the NSE.
Mitul Shah - Head of Research at Reliance Securities said, "Indian equities closed higher following positive global cues while the market prepare for the upcoming earnings season."
As of October 4, the market cap of BSE-listed firms stood at ₹2,73,92,739.78 crore -- rising by ₹5,66,318.84 crore from ₹2,68,26,420.94 crore of the previous day.
Vinod Nair, Head of Research at Geojit Financial Services said, "Mirroring a robust overnight surge in Wall Street and upbeat domestic business data released by banks, the domestic market ended the day on a cheerful note. An unexpected slowdown in the US Manufacturing PMI gave hope that the US Fed would slow the pace of policy tightening. Following suit, US bond yields fell in tandem with the US dollar."
On the interbank forex market, the Indian rupee strengthened on Monday as the dollar fell and bond yields fell. The local currency closed at 81.52 per US dollar, up from 81.8725 per dollar the previous day. The rupee had reached a high of 81.3650 for the day.
Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities said, "USDINR spot closed at 81.52, down 35 paise, due to fall in the US Dollar Index and pullback in the US yields. Rally in stocks also helped. Over the near term, US economic data like ISM services and US NFP report will provide direction. We expect a range of 81.20 and 82 on spot."
Further, Jateen Trivedi, VP Research Analyst at LKP Securities said, "Rupee traded strong with gains of 0.30% or 0.25p against the dollar where the dollar index hangs below 112$ giving some respite to other currencies. Positive FIIs number leading rupee to gain lost ground in a weak global recession position minus India. The Crude prices however have shown positive activity which can dampen the ongoing cheer as OPEC will announce production cuts number amid falling demand it fears due to recession. Rupee going ahead is expected in the range of 81.00-81.80."
Meanwhile, the inflow of funds from foreign investors (FIIs) accelerated in the first two days of October. On Tuesday, FIIs invested a total of 1,344.63 crore in the stock market. On October 3, FIIs became net buyers, bringing in 590.58 crore. FIIs were net sellers in September, with an outflow of 18,308.30 crore from equities.
Also, Shah added, "The market sustained deep losses for the first nine months of the year as central bank officials have increasingly made clear that interest-rate increases and monetary tightening will continue."
Going forward, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said, "the short-term market structure is positive but due to temporary overbought condition we could see range bound activity in the near future. for the traders now, 17200-17150/57800-57600 would be the key support zone whereas 17400-17425/58300-58400 would act as an important resistance zone for the index. buying on intraday correction and sell on rallies would be the ideal strategy for the day traders."