Bulls drive Sensex over 1,000 points higher: Here are top 3 reasons why

Bulls tightened grip on Dalal Street as benchmark indices Nifty50 rallied over 300 points or 1.7 per cent to hit day’s high of 17,628 levels in Friday’s intra-day trade. The S&P BSE Sensex, meanwhile, soared over 1,000 points or 1.7 per cent to claim day’s high of 59,930 levels. TRACK LIVE UPDATES

The spike comes after the US Federal Reserve Atlanta President Raphael Bostic vouched for a measured rate hike approach, which strengthened global sentiments.

Broader markets, meanwhile, jumped in tandem as Nifty Midcap 100 and Nifty Smallcap 100 indices climbed up to 0.9 per cent. Volatility index, India VIX, however, slipped over 6 per cent.

All sectors swimmed in the sea of green. Nifty PSU Bank and Nifty Metal indices led the charge as they advanced up to 5 per cent.

That said, analysts expect aggressive foreign fund outflows to keep markets volatile due to bleaky near-term expectations.

“The market will continue to be under pressure from foreign institutional investor (FII) selling which yesterday was Rs 2,676 crore, excluding the GQG bulk buying of Adani stocks. The US 10-year yield has moved above 4 percent. FIIs can be expected to sell more since this risk-free return is quite attractive considering the muted expectations from the equity markets in the short-term. FII selling will be an opportunity for long-term investors to accumulate high quality stocks, particularly in banking,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Meanwhile, here are top three factors behind Friday’s market run:

Strong global mood: The US Fed Atlanta President Raphael Bostic’s comments in favor of quarter-point hikes sparked Wall Street as traders discarded rate hike concerns. His comments come days after the February minutes reading that indicated a hawkish stance. Key indices Dow Jones, NASDAQ Composite, and the S&P 500 climbed up to 1 per cent overnight.

The strength spilled across markets in Asia-Pacific too, as Nikkei 225, Topix, the S&P 200, Kospi, Kosdaq, Hang Seng, and Shanghai Composite indices rose up to 1 per cent this morning.

Adani Group stocks steamy: Shares of Adani Group companies rallied up to 10 per cent in Friday’s intra-day trade, lending support to the benchmark indices. The spike in Adani Group companies comes after promoters sold shares worth Rs 15,446 crore in four of its listed entities to GQG Partners, a US-based global equity-investment boutique firm.

While shares of flagship firm – Adani Enterprises surged 10 per cent, Adani Transmission, Adani Power, Adani Green Energy, Adani Wilmar, and NDTV were locked at 5 per cent upper circuit. READ MORE

Analysts believe that this development should support public sector lenders as traders feared their exposure to the Adani Group companies.

“The markets have heaved a sigh of relief after the near $2 billion investment by GQG partners in Adani Group. This, therefore, has created a floor for Adani group stocks since a Marquee investor has invested in them at these prices. Also, promoters can use the money raised through the transaction to infuse capital in any group company requiring the funds through warrants, rights issues, or any other instrument. This development should also support the banks, especially PSU Banks, which were hammered earlier, despite good performance due to fear of their exposure to the Adani group,” said Naveen Kulkarni, chief investment officer, Axis Securities.

Technical pullback: According to technical analysis, charts suggest that the NSE Nifty index is likely to form a strong base of 17,200-16,800 range, with a key challenge hurdle of 17,800, therefore, sustainability above this would lead to a further acceleration and upward momentum towards 18,300 this month.

“We expect index to form a major bottom and head towards life highs over the next three to four months. Thus, dips from here on should be capitalised to accumulate quality stocks in a staggered manner as structurally strong support is placed in the range of 17,200-16,800,” said analysts at ICICI Securities.