News

Indian stock market witnessed solid buying interest in intraday trade on Friday, December 19, even as the Bank of Japan (BoJ) hiked interest rate and signalled there could be more hikes in the near future. The Sensex jumped nearly 600 points to an intraday high of 85,067, while the Nifty 50 reclaimed 25,991 on the upside. Gains were broad-based as the BSE Midcap and Smallcap indices rose over half a per cent each during the session. Buying across segments lifted the overall market capitalisation of BSE-listed firms to ₹470 lakh crore from ₹466 lakh crore in the previous session, making investors richer by about ₹4 lakh crore in a single session.

Let's take a look at the five key factors behind the rise in the Indian stock market today:

The Indian rupee strengthened during Friday's session due to some selling of the dollar by traders and importers. However, the domestic currency was trading below the 90 per dollar mark.

"Stabilisation in the Indian rupee seems to have improved sentiment. If the rupee recovers further, it can add to positive market sentiment," said G Chokkalingam, founder and head of research at Equinomics Research Private Limited.

The rupee has seen a sharp decline of 6% this year so far, largely due to heavy foreign capital outflow, the delayed India-US trade deal and technical factors. The rupee's fall, despite a healthy macro backdrop, has weighed on market sentiment lately.

Foreign institutional investors (FIIs) have been buying Indian stocks in the cash segment for the last two consecutive sessions. On Thursday, FIIs bought Indian stocks worth ₹595.78 crore, while on Wednesday, they purchased Indian equities worth ₹1,171.71 crore in the cash segment.

While it is too early to say that a shift in the FIIs trend is here, a decreased intensity of FII selling is positive for the Indian stock market sentiment.

Positive global cues have also influenced market sentiment. In Asia, Japan's Nikkei jumped more than a per cent while Hong Kong's Hang Seng and Korea's Kospi rose by almost a per cent. Overnight, the Nasdaq jumped 1.4% while the S&P 500 climbed by a per cent.

Global stocks rose after the US inflation data came in weaker than expectations, fuelling hopes of further rate cuts by the US Fed in January.

As Reuters reported, US consumer prices at 2.7% year-on-year fell short of the 3.1% ​increase forecast by economists polled by the news agency.

"Overnight strong US market close is expected to aid sentiment for local markets, as the US inflation data for December coming in at 2.7% has strengthened expectations of a quarter percentage point rate cut by the Fed. A lower US policy rate typically improves global risk appetite, and for emerging markets like India, this means stronger foreign inflow potential, a healthier rupee, and better liquidity," Prashanth Tapse, Senior VP (Research), Mehta Equities, noted.

“The improved US growth outlook also supports export-oriented sectors, especially IT, adding further tailwinds. Ideally, when US rates fall, global investors rotate capital toward higher-yielding markets — making India a natural beneficiary. Hence, Nifty has a realistic chance of closing above the 26,000 mark,” Tapse added.

Experts point out that the market is witnessing some short covering after the recent fall. In the previous four sessions, the Sensex dropped by almost 800 points, or nearly 1%, while the Nifty 50, too, retreated by 1%.

As the medium to long-term outlook of the market remains healthy due to expectations of earnings recovery, healthy macro conditions, and an India-US trade deal, investors appear to be buying stocks at lower levels.

Experts say the Nifty 50 has key support in the zone of 25,700 and 25,600, and as long as the index is above 25,500, investors should continue a selective buy-on-dips approach.

"The index continues to trade within the 25,700–25,900 range, reflecting trader indecision. Immediate resistance is placed at 25,900–26,000, while key supports are seen at 25,700 and 25,600. As long as Nifty holds above the 25,500 mark, a selective buy-on-dips approach remains favourable, subject to strict stop-loss discipline," said Amruta Shinde, Technical & Derivative Analyst at Choice Equity Broking.

Read all market-related news here

stories by Nishant Kumar

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

Download the Mint app and read premium stories

Log in to our website to save your bookmarks. It'll just take a moment.

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.