Fast & furious: Sensex jumps over 900 pts, Nifty above 17,800 mark. Here are the 5 factors that lifted momentum

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After a few days of consolidation, the markets regained momentum and reported a blockbuster rally, with the benchmark indices trading at fresh highs, with one-and-a-half-percent gains on September 23.

The BSE Sensex has gradually been marching towards the much-awaited 60,000 mark, rising 958.03 points, or 1.63 percent, to 59,885.36, while the Nifty50 surged 276.30 points, or 1.57 percent, to 17,823 at close.

Here are five key factors behind the rally:

Global cues

The rally in global markets could be one of the reasons that lifted sentiments in the Indian equity benchmarks. European markets, including France’s CAC and Germany’s DAX, gained more than 1 percent, while Britain’s FTSE rose half a percent after the Federal Reserve retained benchmark interest rates unchanged and indicated that there is no imminent rollback of monetary stimulus.

European markets followed the rally in Dow Jones futures, which gained around a percent.

The Federal Reserve indicated on Wednesday that it doesn’t see an imminent rollback of the monetary stimulus that has been supporting the economy throughout the pandemic. “If progress continues broadly as expected, the committee judges that a moderation in the pace of asset purchases may soon be warranted,” a statement from the Fed read. No timeline was given, however, reports CNBC.

Evergrande issue eases

China’s Evergrande issue eased with the injection of cash by the Chinese central bank into the banking system and calmed investors’ nervousness that spooked markets a couple of days back.

Evergrande agreed to settle interest payments on a domestic bond on Wednesday, while the Chinese central bank injected 90 billion yuan into the banking system, temporarily soothing fears of an imminent contagion from the debt-laden property developer.

Evergrande’s main unit, Hengda Real Estate Group, said on Wednesday it had “resolved” one coupon payment due on Thursday on its Shenzhen-traded 5.8% September 2025 bond, via “private negotiations”, reports Reuters.

Rally across sectors

All sectoral indices participated in the rally, with the Nifty Realty index gaining the most, with an 8.6 percent rally, amidst the huge buying demand, likely ahead of the festive season and after a reduction in interest rates by several banks on home loans.

The Nifty Bank and Nifty Financial Services gained more than 2 percent, while auto and IT indices rose more than one percent, and the metal index jumped 1.8 percent.

Controlled Covid cases, with the increased pace of vaccination across the country and a slew of reforms and measures by the government, clearly lifted sentiments, said experts.

“Buoyed by positive tailwinds, like the progress of the monsoon and pace of vaccinations, the bulls upped the ante today in style as the Sensex inched closer towards the 60,000-mark. The slew of reforms undertaken during the pandemic has now started yielding results and most of the sectoral indices, barring the media index, were up today. Mortgage and real estate names were seen buzzing around on incremental positive news flow," said S Ranganathan, Head of Research, LKP Securities.

Broader market participation

The broader markets continued to gain, with the Nifty Midcap 100 index rising 1.5 percent and the Smallcap 100 index 0.84 percent. Both had rallied around 1.5 percent each in previous sessions.

Technical view

The Nifty50 rallied over 1.5 percent and formed a bullish candle on the daily charts as the closing was higher than the opening levels, indicating the gradual march towards the 18,000-mark now.

“The market witnessed some positive movements after it was able to sustain the Nifty50 Index level of 17,500. Research shows it sustaining above 17,850, and the market is expected to gain momentum, leading to an upside projection till the 18,000 level. Momentum indicators like RSI and MACD are likely to stay positive and the market breadth will improve, further strengthening a short-term bullish outlook," said Ashis Biswas, Head of Technical Research, CapitalVia Global Research.

Taking Stock: Market bounces back, Nifty above 17,500; 3 factors that powered the rally

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Indian benchmark indices made a smart comeback on September 21 after two days of selling, supported by positive trends in global markets.

At close, the Sensex was up 514.34 points, or 0.88 percent at 59,005.27 and the Nifty was up 165.10 points, or 0.95 percent, at 17,562.

“Technically, the Nifty50 has recovered from the immediate support around 17,270 levels and sustained above 9-days SMA & Middle Bollinger Band formation, which indicates further strength for the next trading session,” said Sachin Gupta, AVP, Research at Choice Broking.

On an hourly chart, the Nifty index has given a breakout of falling channel formation and showed positive crossover in stochastic and RSI, which supports the upward trend.

“At present, Nifty has its crucial support at 17,250 levels, while resistance lies at 17,650 levels," Gupta said.

JSW Steel, Bajaj Finance, ONGC, IndusInd Bank and Bajaj Finserv were the top Nifty gainers. Maruti Suzuki, BPCL, Hero MotoCorp, Bajaj Auto and Nestle were among the top losers.

The BSE midcap index rose nearly a percent, while the smallcap index was up 0.2 percent.

Except auto, all sectoral indices ended in the green, with FMCG, IT, pharma and metal indices up 1-2.4 percent.

Stocks & sectors

On the BSE, the realty index rose 3.5 percent and IT and metal indices were up 1.5-2.5 percent. Some selling was, however, seen in auto and power stocks.

Among individual stocks, a volume spike of more than 100 percent was seen in Escorts, Godrej Properties and Hindustan Aeronautics.

Long buildup was seen in Escorts, Godrej Properties and Canara Bank, while short buildup was seen in Hindustan Aeronautics, Polycab and Gujarat Gas.

More than 150 stocks, including Pidilite Industries, Kolte-Patil Developers, JSW Energy, HCL Technologies and Bajaj Finance, hit a 52-week high on the BSE.

Here are the factors behind today’s rally:

1 European markets on the up

Despite weak US and Asian markets, positive European markets provided support to the Indian indices.

The European indices FTSE, CAC, DAX were up over 1 percent each after the European Central Bank policymakers said the recent inflation surge was temporary.

2 Dow Futures up over 300 points

US stock futures also bounced a day after global markets were roiled by concerns that the potential default by Evergrande, the world’s biggest property developer, could hurt China’s real estate sector, banks and the global economy.

3 Short covering in most beaten-down sectors

The rally was also supported by beaten-down sectors, with metal indices rallying over 2 percent after tanking nearly 7 percent in the previous session.

Also, capital goods, oil & gas, IT and realty were seen the buying interest and gained 0.5-3.5 percent.

Technical View

The Nifty formed a bullish hammer kind of candle on the daily scale and closed with gains of around 165 points.

“Now it has to continue to hold above 17,500 zones, for an up move towards 17,650 and 17,777 zones, whereas support is placed at 17,350 and 17,272 zones,” said Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services.

Outlook for September 22

Rohit Singre, Senior Technical Analyst, LKP Securities

Sharp recovery was witnessed from a good support zone and the Nifty closed the day at 17,562 with gains of one percent. It formed a bullish candle on the daily chart after two successive bearish candles.

Going forwards, 17,600-17,660 will act as resistance zone. One can lock long gains around said levels and supports are placed at 17,500-17,430 zone. Any dip near the levels will be a buying opportunity, with immediate stop out below 17,500. The overall range is coming in between 17,300 and 17,800.

Ashis Biswas, Head, Technical Research, CapitalVia Global Research Limited

The level of 17,450-17,500 will be an important support zone for the market to stay positive in the short term. If the Nifty holds 17,450-17,500, it can move to 17,850.

Momentum indicators like RSI and MACD suggest that the positive momentum is likely to continue.

Shrikant Chouhan, Head, Equity Research (Retail), Kotak Securities

After two days of sharp correction, the benchmark indices witnessed a sharp pullback rally. The Nifty found support at 17,326 to reverse the falling trend.

Technically, the texture of the sharp reversal formation near the 10-day SMA suggests further uptrend from the current level.

While the short-term trend still looks up, uncertain global market conditions could see the Nifty in the 17,650-17,450 range.

For the day traders, as long as the index stays above 17,450, the pullback rally is likely to continue to 17,600-17,650-1,7680 levels. If the index slips below 17,430, the uptrend would be vulnerable.

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