Bulls return to Dalal Street: Key factors that drove the stock market higher today

Bulls return to Dalal Street: Key factors that drove the stock market higher today

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After a volatile day, stock market bulls had the last laugh as the benchmark equity indices staged a smart recovery on Tuesday. Low-level buying ensued, especially after the European markets opened higher.
The US parliament passed a massive $900 billion stimulus package that lifted sentiments, but concerns over a new strain of the coronavirus also affected markets, especially broader indices that still underperformed their larger peers.

Analysts have cautioned that the market has become extremely expensive and a correction is warranted. On Monday, the indices crashed but, apparently that was one off blip in the larger bull run.

The 30-share pack Sensex added 452.73 points, or 0.99 per cent, to end at 46,006.69. Its broader peer NSE Nifty advanced 137.90 points or 1.03 per cent, to 13,466.30. India VIX dipped nearly 5 per cent.

“Market took an unexpected positive momentum in the afternoon, during a see-saw trading day, following the positive opening of the European market, which recovered from yesterday’s sell-off. The sectorial rally was led by IT and pharma stocks with other sectors also supporting the up move. Volatility is expected to stay high in the near-term due to strict lockdown impacting economic recovery,” said Vinod Nair, Head of Research at Geojit Financial Services.

In the largecaps, Adani Ports was the biggest gainer, up 5.55 per cent, while HCL Tech, Tech Mahindra, Infosys, Sun Pharma, JSW Steel, Divi’s Labs, Wipro and Power Grid were other gainers.

Kotak Mahindra Bank, HDFC, Bajaj Finance, UltraTech Cement, IndusInd Bank, Reliance Industries and Hindalco were among those that traded in the red.

“We expect volatility to remain high in the following sessions too. Traders should proactively manage their positions and avoid unnecessary overnight risk”

Broader markets also recovered but underperformed their headline peers. Nifty Smallcap climbed 0.77 per cent and Nifty Midcap rose 0.85 per cent. Nifty 500, the broadest index on NSE was up 1.02 per cent.

Investors grew richer by Rs 2.01 lakh crore as total market capitalisation of BSE-listed firms rose to Rs 180.81 lakh crore.

Factors that drove the market today:

US votes for stimulus
A majority of the US House of Representatives voted to move a $900 billion coronavirus aid bill struck by Congressional leaders for a vote on passage on Monday evening. Economists expect the package to support the pandemic-ravaged economy and set it up for a stronger recovery next year as vaccines become more widely available.

Vaccinations in Europe
The European Union geared up to start mass vaccinations against COVID-19 just after Christmas after Pfizer and its German partner BioNTech’s vaccines cleared regulatory hurdles on Monday.

Global markets gain
European markets opened higher, setting the mood for recovery. Shares in Germany and France gained over a per cent each. London-based FTSE climbed 0.38 per cent. However, most Asiam markets closed in the red barring Thailand that advanced 1.61 per cent.

Market at a glance

  • IndiGo recovers 4% but SpiceJet continued to slide on UK flight ban
  • Majesco gains about 1% after BSE tweaks price adjustment rules
  • IT stocks top market drivers; Nifty IT index up over 3%
  • India VIX, indicator of volatility, slides 5.19% to below 22
  • 118 stocks hit 52-week highs: Birlasoft, HCL Tech, Infosys, Kansai Nerolac, L&T Infotech and Persistent Systems top names

In the broader markets, Tata Elxsi, Persistent Systems, Welspun Corp, Coforge, Mindtree and Adani Gas were top gainers, registering gains of 6-8 per cent.

Prestige Estate Projects, YES Bank, Shriram Transport Finance, PVR, DCM Shriram and Gujarat Narmada Fertilisers were major losers from the pack, down 3-6 per cent.

All sectors ended with gains. Nifty IT was up 3.36 per cent, while Nifty Pharma and Nifty Metal added 2.22 per cent and 1.36 per cent, respectively. Banking indices also registered decent gains.

Market breadth was in favour of gainers as 1,569 stocks ended in the green, while 1,352 names settled with cuts. As many as 118 securities hit 52-week highs, mostly from the smallcap space. Meanwhile, 27 names hit 52-week lows, mostly from the microcap space. About 250 stocks hit upper circuit limits and 350 lower circuit limits.

Credit: Stocks-Markets-Economic Times

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