5 Reasons Why Sensex Rallied 1,041 Points Today

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Indian share markets ended on a strong note today as index heavyweight stocks rallied and Jerome Powell's comments on recession provided investors some relief.

At the closing bell, the BSE Sensex stood higher by 1,041 points (up 1.9%).

Meanwhile, the NSE Nifty closed higher by 288 points (up 1.7%).

Bajaj Finance, Bajaj Finserv, and Tata Steel were among the top gainers today.

Bharti Airtel, UltraTech Cement, and Dr Reddy's Lab, on the other hand, were among the top losers today.

Tata Power share price ended on a flat note after falling in early trade today. Despite reporting good results, Tata Power share price is falling.

The SGX Nifty was trading at 16,947, up by 290 points, at the time of writing.

The broader markets ended on a positive note. The BSE MidCap climbed 0.9% and the BSE SmallCap index ended higher by 0.7%.

Barring telecom sector, all sectoral indices ended on a firm note today with stocks in the finance sector, IT sector, and metal sector witnessing most of the buying.

Shares of Timken India and Adani Total Gas hit their 52-week highs today.

Since you're interested in high flying stocks, check out our guide on how to pick the best multibagger stocks in 2022.

Also, check out the 5 stocks paying out big dividends in August 2022.

Tata Steel and Bajaj Finance were amongst the most active shares on the BSE today.

If you're interested in knowing which shares to trade, read our guide on the best intraday stocks for today.

The rupee is trading at 79.61 against the US$.

As the rupee depreciates, check out these five companies which stand to gain big from a weakening rupee.

Gold prices for the latest contract on MCX are trading up by 0.6% at Rs 51,043 per 10 grams.

Meanwhile, silver prices for the latest contract on MCX are trading up by 2.4% at Rs 56,127 per 1 kg.

Of late, gold price is falling while silver isn't far behind. Silver price is also falling as industrial demand for silver is under pressure while a stronger US dollar is adding to worries.

But the past two days data suggest that both these metals have started to recover.

So when will gold and silver prices recover?

Once the Fed signals an end to the rate hikes (or hints at it) and when investors are confident the US economy will emerge from the recession, that's when we see gold and silver prices recovering.

Here are four reasons why Indian share markets rallied today.

#1 Fed Rate Hike Outcome

Yesterday, the US Fed raised interest rate by 75 basis points to bring it to 2.25-2.5%. This was already expected.

The policy rate is now close to the Fed's estimate of the long-run or neutral rate 2.5%.

#2 Recession Fears Ease

Fed Chair Jerome Powell's comments dismissing chances of a recession and gave investors some relief.

Here's an excerpt of what he said,

• I do not think the US is currently in a recession. And the reason is, there are just too many areas of the economy, performing too well.

#3 Strong Results from Index Heavyweights

Bajaj twins - Bajaj Finance and Bajaj Finserv both rallied over 9% today as they posted stellar set of earnings.

Bajaj Finance reported its highest ever quarterly profit while Bajaj Finserv approved bonus issue and stock split plan.

#4 Rupee Factor

The rupee has been falling for quite some time now. But today, it appreciated. The rupee appreciated by 14 paise to 79.77 against the dollar, tracking overnight weakness in the greenback.

Rupee's appreciation often attracts FIIs as it adds to the return for foreign investors. Which brings us to our final reason.

#5 FII Flow

This month's FII outflows have been very less at Rs 13.7 bn compared with Rs 502 bn of outflows in June 2022 and Rs 399.9 bn outflows in May 2022.

With this short recovery, investors' nerves have calmed. But it remains to be seen when the stock market will fully recover.

In news from the steel sector, Tata Steel was among the top buzzing stocks today.

Share price of Tata Steel surged more than 5% today after the stock turned ex-date for subdivision of shares in a ratio of 1:10.

Tata Steel's board of directors had approved a proposal of sub-division of the equity shares. The rationale behind Tata Steel stock split was to enhance the liquidity in the capital market, and to widen shareholder base.

Did you know, Tata Steel is among the top dividend paying companies in India?

The Tata group's steel arm has distributed a hefty dividend of Rs 51 per share, resulting in a dividend yield of 4.7% in the financial year 2021-22. This number was higher than its 5-year average dividend yield of 2.5%.

The financial year 2022 was remarkable for the steel industry, where the entire sector reported its best financial performance. All of this was led by an upswing in the steel cycle, allowing steel companies to scale their businesses.

But now, the tables have turned, and metal stocks have taken a knock in recent months.

Moving on to news from the electric vehicles sector, as per reports, the government is looking at floating its largest ever tender for procuring nearly 8,000 electric buses for state transport undertakings (STUs) across the country.

This is the second such tender which the government has announced. This is done to encourage STUs to replace ageing, polluting diesel buses with electric ones.

Earlier this year, Convergence Energy Services (CESL), the state-run company handling the acquisition of EVs for central and state government departments, floated a tender to procure 5,580 electric buses. The tender was valued at about Rs 55 bn.

Tata Motors won the majority of the contracts to supply about 5,000 buses under the scheme.

Note that the electric vehicle (EV) megatrend is a once in a century revolution, happening right in front of us.

The revolution has taken the auto sector by storm. All segments of the sector are ripe for disruption and India's top EV stocks are set to benefit from this shift.

Take a look at the chart below which shows the massive opportunity in the two-wheeler EVs.

Here's what lead Smallcap Analyst at Equitymaster, Richa Agarwal wrote about this in one of the editions of Profit Hunter:

• In the last five years, two-wheeler sales in India were around 2 crore units per year. Now the sector is cyclical and has been in the downturn for some time. So let's consider a moderate 5% growth for the next 10 years.
  
  By 2030, we are looking at 2-wheeler sales of 3 crore units. Even if one third of this is EV sales, that's 1 crore electric 2-wheelers per year.
  
  In the last 2 years, average electric 2-wheeler sales were 1.5 lakh units. From 1.5 lakh to 1 crore, that's a 66x opportunity in 2-wheeler EVs.
  
  This is an annual growth rate of 52% over next 10 years. It's an almost vertical growth opportunity.

As per Richa, this is like a gold rush. But like in any gold rush, the winners will just be a few.

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

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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