5 Reasons Why Sensex Surged 617 Points Today

Mon, 8 Feb Closing

   Pre-Open   

   Momentum Moves   

   SGX Nifty   

   09:30 am   

   12:30 pm   

After staging a gap-up opening, Indian share markets witnessed positive trading activity throughout the day today and ended on a strong note.

Benchmark indices extended their winning streak into sixth straight session with both Sensex and Nifty ending at record closing highs.

At the closing bell, the BSE Sensex stood higher by 617 points (up 1.2%).

The NSE Nifty closed higher by 192 points (up 1.3%).

M&M and Bajaj Finserv were among the top gainers today.

The SGX Nifty was trading at 15,140, up by 194 points, at the time of writing.

Both, the BSE Mid Cap index and the BSE Small Cap index ended higher by 1.5%.

On the sectoral front, gains were largely seen in the metal sector, automobile and IT sector.

Asian stock markets ended higher today. As of the most recent closing prices, the Hang Seng ended up by 0.2% and the Shanghai Composite ended up 1%. The Nikkei ended higher by 2.1%.

US stock futures are trading higher today indicating a positive opening for Wall Street indices. Nasdaq Futures are trading up by 49 points (up 0.4%), while Dow Futures are trading up by 102 points (up 0.3%).

The rupee is trading at 72.94 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.1% at Rs 47,313 per 10 grams.

Here are Top 5 Factors Why Indian Share Markets Rallied Today

Firm Global Cues: Asian share markets hovered near record highs on hopes a US$ 1.9-trillion Covid-19 aid package will be passed by US lawmakers this month just as coronavirus vaccines are being rolled out globally.

Recovering Economy: Last Friday, the Reserve Bank of India (RBI) said India's economy was coming back on track. With the beginning of the vaccination drive, economic growth was likely to pick pace, the central bank said sharing the outcome of its bi-monthly monetary policy committee meeting.

FII Inflows: Foreign portfolio investors (FPIs) remained net buyers to the tune of Rs 122.7 billion in Indian share markets in the first five trading sessions of February, as positive sentiment after the Union Budget 2021 sparked a rally.

Q3FY21 Earnings: So far, India Inc's earnings reports have beaten analysts' expectations, improving investor sentiments.

Sectoral Indices End in Green: Barring FMCG stocks, all sectoral indices ended in green. The BSE metal index and the BSE auto index surged over 3%.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of the current stock market scenario, note that since the lows in March 2020, the smallcap index has gained more than 100%.

While caution is indeed warranted, Richa Agrawal, Research Analyst at Equitymaster, thinks there is still a lot more steam left to this smallcap rebound rally.

Have a look at the history of previous smallcap crashes and rebounds over the last two decades...

As you can see, every big fall in the smallcap index was followed by a sharp up move, a minimum gain 200%. Twice the rebounds were just shy of touching 300%.

Richa believes if you focus on the quality of business, margin of safety in valuations, and an optimum asset allocation, you are likely to create huge wealth for yourself.

In news from the financial markets space, the Reserve Bank of India (RBI) will aim to purchase up to Rs 200 billion worth of government bonds via open market operations on Wednesday, the central bank said in a release today.

The above move pulled yields down by five basis points with the benchmark gauge trading at 6.03%.

Four sets of sovereign papers are included in the proposed purchase plan with residual maturities ranging from 4 to 14 years.

The RBI has so far bought about Rs 2.5 trillion of net debt in the current financial year. The figure will be as high as Rs 3 trillion by end-March as authorities are keen to shrink the spread between the 10-year bond yield and repo rate to around 150 basis points from more than 200 basis points.

Yields on benchmark government bonds had risen as much as 24 basis points since January 31, the day before the Budget was presented.

Last Friday, when RBI Governor Shaktikanta Das said the cash reserve ratio for banks would go back up by a percentage point in a staggered manner, yields jumped as much as seven basis points. It closed at 6.08% on Friday.

Yields began to rise while Das was speaking and at an auction later that day the RBI rejected all bids for Rs 22 billion of notes while underwriters had to buy Rs 8.8 billion of two other papers on sale.

Yields on the benchmark 10-year bond surged 17 basis points in all last week, its biggest jump since April.

We will keep you updated on the latest developments from this space. Stay tuned.

Speaking of stock markets, note that the Budget announcements cheered Dalal Street last week as the NSE Nifty hit all-time high of 15,014 on Friday. The index surpassed its previous highs today and rose as much as 1.4% to 15,160.

Now, the important question on traders' minds is does the market have enough steam left to extend last week's gains fueled by the budget announcements?

Last week in Momentum Moves, Brijesh Bhatia spoke about what traders can expect on budget day.

In this week's video, Brijesh talks about how the charts say that the Nifty rally will likely pause this week. As per Brijesh, we might see Nifty reversing from the resistance zone of 15,070-15,450.

Tune in to the video to find out more:

Moving on to stock specific news...

Shree Cement was among the top buzzing stocks today.

Shree Cement today joined the elite club of companies with Rs 1-trillion market capitalization on the BSE after its share price hit a new high of Rs 28,281, rallying 5% in intra-day trade.

Shree Cement became the second pure cement company after UltraTech Cement to achieve the feat.

In the past six trading sessions, Shree Cement share price has surged as much as 23% after the company reported healthy EBITDA growth of 28.2% year-on-year (YoY) to Rs 10.9 billion driven by improved sales volume and lower production costs.

Shree Cement reported a 102% YoY rise in its net profit to Rs 6.3 billion for the quarter ended December.

Shree Cement share price ended the day up by 4.8%.

Market participants were also tracking Adani Enterprises share price.

Shares of the company hit a fresh 52-week high of Rs 683, up 7% after Adani Airports completed acquisition of 23.5% stake in Mumbai Airport.

"Adani Airport Holdings (AAHL), the flagship holding company of Adani Group for its airports business and a wholly owned subsidiary of Adani Enterprises, has acquired 23.5% equity stake, i.e. 282 million equity shares of Rs 10 of Mumbai International Airport, from ACSA Global and Bid Services Division (Mauritius) for Rs 1,685.25 crore," Adani Enterprises said in a regulatory filing.

In August 2020, Adani Group had signed an agreement with GVK Group to acquire its 50.5% stake in Mumbai airport. The deal also included acquisition of 23.5% stake held by the two South African companies.

Adani Enterprises share price ended the day up by 5.6%.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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