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Stock Market Rally Explained: The rally can be attributed to several factors, including domestic data, global cues, and stock-specific developments
Stock Market Rally: Sensex, Nifty Surge – Key Factors Behind Today’s Market Boom
Why Is The Market Rising Today? Indian benchmark equity indices surged by 1% on Thursday, with the Nifty reclaiming the crucial 23,000 mark for the first time since February 14, driven by a rally in IT stocks and positive global cues following the US Federal Reserve’s decision to maintain its rate cut projections for this year.
At its peak during the day, the Sensex surged 967.34 points, or 1.28%, reaching 76,416.38 by 2 PM, while the broader NSE Nifty rose by 291.7 points, or 1.27%, to 23,199.30.
Leading the gains in the Nifty pack were Titan, Eicher Motors, Bharti Airtel, Bharat Petroleum Corporation, and Bajaj Auto, all rising nearly 4%. On the flip side, Bajaj Finance, Apollo Hospitals Enterprise, Bajaj Finserv, UltraTech Cement, and IndusInd Bank were among the top laggards.
The rally can be attributed to several factors, including positive domestic data, improving global cues, and stock-specific developments. However, the primary driver was the US Federal Reserve’s policy decision, which provided a significant boost to Indian IT stocks.
Investor Optimism on Fed’s Decision
The optimism surrounding today’s market rally stems from the Fed’s policy decision and its outlook. Despite projecting higher inflation and slower growth, the Fed’s indication of two rate cuts in 2025 fueled investor confidence.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, commented, “The Federal Reserve’s decision to keep the funds rate steady at 4.25%-4.5% while signaling two rate cuts in 2025 has encouraged positive market sentiment.”
Vikas Jain, Head of Research at Reliance Securities, added that the global momentum following the Fed’s announcement is likely to support the Indian market’s upward trajectory.
Bargain Buying and Valuation Comfort
After a sharp correction from peak levels, investors are finding comfort in current valuations, which have become more attractive. Pankaj Pandey, Head of Research at ICICI Securities, noted, “With recent price corrections, valuations are more reasonable, and the domestic macroeconomic indicators remain largely positive.”
Emkay Global observed that much of the valuation froth has subsided, with most indices, including small and mid-caps, now trading below their long-term average P/E ratios.
Positive Macroeconomic Data
Recent macroeconomic data has eased concerns about slowing growth, further supporting market sentiment. India’s GDP grew by 6.2% in Q3FY25, retail inflation dropped to 3.61% in February from 4.26% in January, and the Index of Industrial Production (IIP) saw a growth of 5% in January, up from 3.2% the previous month.
Expectations for RBI Rate Cuts
With inflation easing, the Reserve Bank of India (RBI) is expected to cut rates in its upcoming April meeting. Madhavi Arora, Lead Economist at Emkay Global Financial Services, stated, “With inflation under control, the possibility of an RBI rate cut in April looks solid, and there may be one more cut to follow.”
Hopes for Earnings Revival
Looking ahead, markets are anticipating an earnings revival from Q1FY26, which could trigger another rally in the domestic market. According to analysts, India’s earnings growth is projected to be 12-14% over the next 12 months, with potential acceleration in 2027.
Brokerage firm Emkay Global forecasts that the Nifty’s earnings per share growth of 13.6% has minimal downside risk, driven by a recovery in discretionary consumption.
IT Stocks Rise
IT stocks with US exposure surged, lifting market sentiment.
Infosys, HCL Technologies, LTIMindtree, TCS, Tech Mahindra, Mphasis, Mastek, Coforge, KPIT Technologies, Birlasoft, and Sonata Software were among the top gainers on Thursday, as investors welcomed the US Federal Reserve’s decision to keep interest rates unchanged following its policy meeting on March 19.
The positive movement in IT stocks lifted the Nifty IT index by nearly 1.3% to 36,699, marking its highest level in the past five sessions.
Will the Rally Continue?
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, remains optimistic about the market’s near-term outlook.
“The market has navigated through numerous challenges, breaking past key resistance levels of 22,500-22,750,” Bathini said. “With strong sentiment and an uptick in domestic liquidity, the Nifty has successfully reclaimed the 23,000 mark, which bodes well for the short to medium term.”
The Nifty50 crossed the 23,000 threshold in early trading and is expected to close above this level, signaling a positive technical outlook for investors.
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