On Monday, March 16, there was a tremendous rise in the Indian stock market at the end of the session. This rise was due to the increase in banking, financial, auto and FMCG shares. On the other hand, geopolitical risk still remains. If we talk about the data, Sensex closed at 75,502.85 with a rise of 939 points, or 1.26%, while Nifty 50 settled at 23,408.80 with a rise of 258 points, or 1.11%.
From the day’s low of 73,949.76, the Sensex jumped 1,553 points, while the Nifty 50 gained more than 450 points, or nearly 2 per cent, from its intraday low of 22,955.25. However, this progress was not visible everywhere. The BSE 150 Midcap index closed 0.42% lower, while the BSE 250 Smallcap index fell 0.47%. Among sectoral indices, Nifty Bank rose 1.22 per cent, while the Financial Services index saw a rise of 1.50 per cent. Nifty Private Bank closed up 1.24%. Due to the decline in mid- and small-cap segments, the total market capitalization of BSE listed stocks saw a marginal increase of only Rs 45,486.92 crore.
Why did Sensex and Nifty 50 rise?
Market benchmarks rose due to buying in big stocks like HDFC Bank, ICICI Bank, Reliance and SBI. Investors bought good quality big shares. Recent big declines had driven down their prices, providing a good entry opportunity. Vinod Nair, Research Head, Geojit Investments said that recovery was seen in the equity market towards the end of the session. It got the support of value buying in domestic sectors like auto, banking and FMCG. This was a relief rally after the recent selloff. Nair said near-term challenges remain for the market, even as valuations have eased somewhat, leading to narrowing of the premium valuation gap across many key sectors.
Nair said that the mood of investors in the coming days will depend on the developments in the Strait of Hormuz. Any reduction in supply chain disruptions there could provide further support to the market. However, oil prices remain high, putting pressure on the direction of the entire market. Rising crude oil prices, weak rupee and foreign capital outflows due to the US-Iran war remain the main challenges for the domestic market, and any uptick in the market may be short-lived.
Rupee falls, crude oil rises
According to preliminary data released by PTI, the Indian rupee fell 12 paise to close at a record low of 92.42 against the US dollar on Monday. Brent crude is trading just above $100 per barrel, and given the current situation in the Middle East, it does not look like oil prices will go down any time soon.
Amidst the geopolitical turmoil, all eyes are also on the policy decisions of the US Federal Reserve. While the Fed is expected to keep interest rates unchanged on March 18, investors will also keep a close eye on the Fed’s comments on growth and inflation trends.
Nifty Auto (up 1.67%) and FMCG (up 1.14%) also registered strong gains.