Market Highlights: Banks, Metals Boost Sensex by 694 Points, Nifty Climbs Past 24,200; Investors Eye U.S. Election Results

TDT | Manama                                                      

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In a robust rebound, India’s equity markets saw significant gains on November 5, 2024, with the BSE Sensex surging by 694 points to close at 79,476.63, and the NSE Nifty advancing by 218 points to reach 24,213. The uptick was primarily fueled by strong performances in the banking and metals sectors, as global cues offered renewed optimism amid volatile markets. This rally marks a recovery from earlier market jitters, as investors turned their focus to the ongoing U.S. election results, which are expected to have a ripple effect across global economies.

The rally was led by banks and metal stocks, which saw marked gains in the face of promising earnings and improved market sentiment. Among the top gainers on the Sensex were Axis Bank, Tata Steel, Hindalco, and JSW Steel, each rising between 3-5%. The momentum in banking stocks was further supported by a strong outlook on public sector banks, which continued to benefit from higher credit growth and favorable economic indicators.

Vinod Nair, Head of Research at Geojit Financial Services, attributed the rise to positive global cues, including the People’s Bank of China’s decision to cut its reserve requirement ratio by 0.5%. This move is expected to enhance liquidity and stimulate growth across Asian markets. “The sentiment was reinforced by China’s measures, which could bolster broader economic activity, supporting demand in metals,” noted Nair

The metals sector was particularly buoyed by strong demand forecasts for steel and aluminum, with China’s policy signaling potential increases in infrastructure spending. This optimism was reflected in the share prices of companies like Tata Steel and Hindalco, which posted notable gains. Analysts expect continued interest in these sectors as long as global commodity prices remain stable.

Technical analysts highlighted that the Nifty has managed to hold above its 40-day moving average, suggesting continued momentum as it eyes the 24,500 mark. Ajit Mishra, SVP - Technical Research at Religare Broking, remarked, “The immediate resistance zone for Nifty lies between 24,500 and 24,520, but breaking through this range may signal further bullish sentiment.” Mishra advised traders to adopt a stock-specific approach to capitalize on the sectoral rallies while maintaining caution amid volatile conditions.

Global markets were up as well, with indices in the U.S. and Europe trading positively. The ongoing U.S. presidential election has garnered significant attention as markets prepare for potential policy shifts depending on the outcome. With Kamala Harris and Donald Trump locked in a tight race, investors are carefully monitoring the situation, anticipating possible impacts on foreign trade policies and international relations. Market sentiment is particularly sensitive to potential changes in tax policies and infrastructure spending, which could affect multinational corporations and sectors dependent on international demand.

The BSE MidCap and SmallCap indices also saw gains, each advancing by around 1.7%, indicating positive sentiment across broader markets. This rally suggests that investors are retaining confidence in India’s economic fundamentals despite short-term global uncertainties. Analysts suggest that premium valuations in certain stocks warrant a cautious approach, as foreign institutional investors (FIIs) may continue profit-booking due to elevated valuations in Indian markets.

The Indian rupee closed at 83.13 per U.S. dollar, reflecting relative stability amid fluctuating currency markets globally. U.S. and U.K. stock futures were also up, trading as high as 0.8% in anticipation of the election results. Emerging markets, in general, showed strength as investors hedged bets on a stable geopolitical environment post-election.

Moving forward, analysts recommend a balanced approach for investors, especially in light of potential volatility as the election results unfold. “A sector-specific strategy is advisable, with banks and metals presenting immediate opportunities, while FMCG and oil remain under scrutiny,” explained Mishra. As global factors continue to influence Indian markets, traders are advised to stay vigilant and prepared for possible fluctuations in the coming weeks.

In summary, the Sensex’s 694-point surge and Nifty’s rise past 24,200 underscore strong investor sentiment, aided by global economic policies and sector-specific growth prospects. However, with U.S. election results still pending, markets may experience swings based on geopolitical developments.