Nifty 50 to Sensex Why Indian stock market has been rising for last four days explained with 5 crucial reasons

Positive global sentiments, strong Indian economy, liquidity buzz, and better-than-expected inflation data are driving continuous rallies on Dalal Street.

Stock market today: Following strong global cues, the Indian stock market extended its rally for the fourth day in a row. The Nifty 50 index regained the 22,000 level within an hour of the opening bell whereas the Bank Nifty index gave a fresh breakout at the 46,300 mark within a few minutes of the opening bell. 

The BSE Sensex continued to sustain above the 73,000 mark and extended its previous gain by logging an intraday gain of around 0.50 percent on Friday. However, in the broad market, the small-cap and mid-cap indices continue to outperform key benchmark indices.

Expecting further rally in key benchmark indices, Sumeet Bagadia, Executive Director at Choice Broking said, “The Bank Nifty index has given fresh breakout at 46,300 mark and the index is looking positive on chart pattern. It may touch the 46,800 to 46,900 level in the next few sessions whereas breaching above 46,900 on a closing basis may open fresh upside potential for the 47,800 mark." However, he said that Bank Nifty has a crucial base placed at 45,900 mark.

Bagadia said that the Nifty 50 index is facing resistance at the 21,125 mark. On breaching this resistance, the 50-stock index may go up to the 22,300 mark. However, he maintained that 21,800 would remain major support for the key benchmark index.

According to stock market experts, the Indian stock market is rising for various reasons but positive global sentiments are the prominent one. Apart from this, the strong Indian economy, liquidity buzz after better-than-expected inflation data in India, strong US CPI data, etc. are some of the major reasons for continuous rallies on Dalal Street.

Why Indian stock market is skyrocketing?

Speaking on the reason for the rise in the Indian stock market, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "The Indian stock market has been in uptrend for the last four sessions due to strong global market sentiments. Global sentiments have gone highly positive after the strong US CPI data. this has created a rate-cut buzz among central banks across the world. In India, we have already witnessed better-than-expected inflation data, which cements rate cut buzz in India."

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"PSU stocks resumed their ongoing rally after a short pause. OIL & Gas posted solid gains due to impressive quarterly results, improved GRM, and strong growth expected in India’s oil consumption going forward. With the end of the Q3 result season, the focus is now shifting to fundamentals and economic macro data. Domestic equities are taking support from better-than-expected inflation which would keep the trend positive," said Siddhartha Khemka, Head - Retail Research at Motilal Oswal.

Top 5 reasons for Indian stock market rally

Stock market experts listed the following 5 reasons for a continuous rally on Dalal Street:

1] Strong global cues: "After strong US CPI data, the Wall Street and other global bourses are rising which has fueled buying interest in the Indian stock market as well. Japanese Nikkei is near an all-time high whereas most of the Asian and European bourses have registered strong rally after the US CPI data release," said Avinash Gorakshkar.

2] Indian economy: Avinash Gorakshkar went on to add that the Indian economy has been doing well in the last few years and this has happened even when the global market was reeling under the inflation concern. As global inflation is expected to feel relief after the strong US economic data, the Indian economy is expected to do exceedingly well and recent Indian inflation is a glaring example of it. This rise in the Indian markets can be attributed to this buzz as people are buying heavily in the wake of the resurging Indian economy in the near term. He said that most of the index heavyweights are an integral part of the national economy and their Q3 results were either better or in sync with the market estimates.

3] FII trade pattern: "If you look at the trade pattern of FIIs in the last four days, you would come to know that FIIs are net buyers in the cash segment whereas they have remained net sellers in the Future & Option (F&O) segment. What does it mean? In my opinion, it is a signal that FIIs are switching their money from short-term trade positions to long-term positions. And this is a good sign for the Indian stock market as FIIs are bullish on the Indian stock market in the medium to long term," said Sandeep Pandey, Founder of Basav Capital.

4] Ample liquidity: "After the soft Indian inflation data, the market is expecting a rate cut from the Reserve Bank of India in the near term. At least, a signal or timeline for rate cust is something that market observers are expecting in the next RBI meeting. This is expected to fuel liquidity in the market as lowering of interest rate may lead to more availability of the money in the markets," said Sandeep Pandey.

5] Participatory rally: "After the recent sell-off in the Indian PSUs and banking shares, we are witnessing bottom fishing in these stocks in the current rally, which means the PSU theme is still under the radar of stock market bulls. Apart from this, small-cap and mid-cap indices are still dominating over the key benchmark indices, which means the recent rally is across segments and it is going to sustain," said Avinash Gorakshkar of Profitmart Securities.