The Indian equity benchmarks staged a strong bounce back on Monday, August 11, after both SENSEX and NIFTY fell to three-month lows in the previous session and posted their longest string of weekly losses in five years.
The SENSEX rose as much as 700 points and NIFTY50 index reclaimed its important psychological level of 24,550 and touched an intraday high of 24,583.65.
As of 2:52 pm, the SENSEX was up 670 points at 80,528 and NIFTY50 index advanced 212 points to 24,576.
Here are key reasons why markets are surging on Monday:
Trump-Putin talks
Bullish sentiment among market participant was ignited after US President Donald Trump and Russian President Vladimir Putin agreed to hold talks on August 15 in Alaska to negotiate an end to the war in Ukraine.
India welcomed the decision and Ministry of External Affairs in a statement said that India welcomes the understanding between the US and Russia for a meeting.
Analysts expect that a breakthrough in talks between Putin and Trump could lead to US rolling back additional 25% tariff on Indian goods which he had imposed for buying Russian oil.
Trump had threatened to impose new sanctions and tariffs from Friday against Moscow and countries that buy its exports unless the Russian leader agreed to end the conflict, the deadliest in Europe since World War Two, news agency Reuters reported.
It was unclear by Friday evening whether those sanctions would take effect or be delayed or cancelled. The administration took a step toward punishing Moscow’s oil customers on Wednesday, imposing an additional 25% tariff on goods from India over its imports of Russian oil, marking the first financial penalty aimed at Russia in Trump’s second term, report added.
Technical factors
Analysts said that Monday’s bounce back was aided by technical factors as well. With relentless selling the markets went into oversold zone and a bounce back on account of short covering was fuelling rally on Monday.
NIFTY50’s relative strength index (RSI) went down to levels of 31, which suggests that the index was trading close to oversold zone. Analysts say that reading near 30 indicates that the index or a stock is in an oversold zone while reading above 70 indicates that the index or a stock in an overbought zone.
Heavyweights rally
Rally was supported by gains in index heavyweights like HDFC Bank, Reliance Industries, State Bank of India, Larsen & Toubro, Eternal, Axis Bank and Tata Motors were top movers in the SENSEX. They collectively added over 450 points towards gain in the SENSEX.
Sectoral landscape
Buying was visible across board as all the major sector gauges compiled by the National Stock Exchange were trading higher led by NIFTY PSU Bank index’s over 2% gain. NIFTY Realty, Healthcare, Auto, Financial Services, FMCG, metal, Bank, Financial Services and Pharma indices also rose between 0.8-1.9%.
Broader markets were also witnessing buying interest as NIFTY Midcap 100 index rose 0.91% and NIFTY Smallcap 100 index climbed 0.42%.
NIFTY50 gainers and losers
Adani Enterprises was top gainer in the NIFTY50 index, the stock rose 4.95% to ₹2,286. Eternal, Tata Motors, Trent, Grasim Industries, State Bank of India, Apollo Hospitals, Ultratech Cement and Jio Financial Services also rose between 1.9-3.12%.
On the flipside, Hero MotoCorp, ICICI Bank, Bharat Electronics, Power Grid and Bharti Airtel were among notable losers in the NIFTY50 index.