Nifty, Sensex rally in early trade on March 21 | 3 reasons behind Indian stock market upswing

Both the benchmark indices of the Indian stock market – the BSE Sensex and the NSE Nifty 50 – opened higher on Thursday, and surged over 80 basis points to the day’s highs.

The 30-share BSE Sensex, which opened at 72,507.36, with gains of over 400 points, rallied up 0.84 per cent to the day’s high of 72,710.39. Shares of steel suppliers and manufacturers Tata Steel and JSW Steel led the rally. Both stocks were up around three per cent at their intraday highs.

The broader NSE Nifty 50 index also followed a similar trajectory. The index opened at 21,989.90, up 151 points. The early trade saw the index surging 0.85 per cent to a high of 22,025.50.

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The sentiment in the broader markets also remained positive, with all BSE indices remaining in the green in early trade.

Here are 3 reasons behind the market rally:

1. Jerome Powell’s comment: On Wednesday (local time), the United states Federal Reserve chair Jerome Powell, following the Federal Open Market Committee (FOMC) meeting, hinted that the country’s central bank may decrease the benchmark lending rates three times this year. That has spurred optimism among Indian and foreign investors alike, leading to a bullish momentum in the markets.

2. DII inflows strong, FIIs inflows rising: Foreign institutional investors (FIIs) have remained net sellers in recent times, although their net outflow number has been going down. However, domestic institutional investors (DIIs) have remained net buyers, and overpowered FIIs moves. This cash inflow is likely to have added to the rally.

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There is a shift in the foreign investors’ take on the market as well. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that “the tug of war between FIIs and DIIs is being won by the DIIs for some time now[…]FIIs are likely to slow down their selling and may turn buyers.”

3. Industrial stocks reel in investments: On Thursday, around 10:30 am, all five stocks that were top gainers on BSE, viz. IRB, ACE, Lloyds’ Engineering, HCC, and HEG, belonged to the S&P BSE Industrials index. The index itself was up 2.3 per cent. Investors’ bullish view in these stocks is likely due to anticipation of increased capital expenditure from public and private sector.

What’s next?

“Indian markets are facing resistance near the 21,950-22,000 levels. Once Nifty closes over the aforesaid resistance, it can move on to the next resistance level of 22,200,” Choice Broking’s Deven Mehata said.

He also noted that “the charts of Bank Nifty indicate that it may get support at 46,200, followed by 46,000 and 45,900. If the index advances, 46,600 would be the initial key resistance, followed by 46,750 and 47,000.”