Sensex rises 900 points. What's behind the stock market rally?

Stock market update: The BSE Sensex climbed 827.37 points to 80,229.53, adding over Rs 3 lakh crore in market capitalisation. On the other hand, the Nifty50 rose 225.30 points to 24,406.10.

In Short

• Sensex and Nifty rebound after five-day loss streak
• ICICI Bank leads stock market rally with strong earnings
• IDFC First Bank shares drop 10% due to profit fall in Q2 results

Benchmark stock market indices rebounded sharply on Monday after five days of losses, driven by strong gains in ICICI Bank following upbeat quarterly earnings.

At around 11:28 am, the BSE Sensex climbed 827.37 points to 80,229.53, adding over Rs 3 lakh crore in market capitalisation. On the other hand, the Nifty50 rose 225.30 points to 24,406.10.

It is worth noting that both the Sensex and Nifty50 index recently shed nearly 8% from record highs in late September, pressured by sustained foreign outflows and weaker corporate earnings. Investors have diverted funds to China, attracted by Beijing’s stimulus and lower valuations. Weak earnings have also impacted sentiment, compounding selling pressure in recent weeks.

BANK STOCKS POWER DALAL STREET RALLY

On the Sensex, ICICI Bank led the rally alongside M&M, JSW Steel, Adani Ports, IndusInd Bank, Nestle India and HUL.

It may be noted that IDFC First Bank fell 10% after reporting a 73% YoY profit drop to Rs 201 crore, while DLF shares rose over 4% on strong Q2 earnings from newly launched home sales.

Sector-wise, the Nifty PSU Bank index surged 2%, with Bank of Baroda, SBI, and PNB leading gains. Nifty Financial Services, IT, Media, and Metal indices also opened higher, while mid- and small-cap indices remained flat.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “The trend of flight to quality is likely to sustain given the good numbers from banking majors like HDFC Bank and ICICI Bank where valuations continue to be fair. Investors can profit from these polarised valuations.

In Asia, stocks edged higher on Monday, with Japan’s Nikkei 225 up 1.6% and South Korea’s Kospi rising 0.6%, supported by a dip in the yen amid Japanese political uncertainty.

Oil prices fell by over $3 per barrel as Israel’s recent retaliatory strike on Iran avoided disrupting energy infrastructure, alleviating some Middle Eastern tension.

“The global market structure may turn favourable after the subdued Israeli strikes against Iran avoiding the Iranian oil fields which has resulted in a sharp drop in crude prices. The imminent US presidential elections and the uncertainty associated with that will continue to weigh on markets,” Vijayakumar added.