Sensex Jumps 1,500 Points; D-St Investors Gain Rs 5 Trillion: Here Are 4 Reasons Behind the Rally

Sensex, Nifty hit record high: Benchmark indices witnessed a strong bull rally on Thursday, breaking out of range-bound zone that had persisted for the past few weeks. Bharti Airtel and Hindalco were among the top gainers. BSE Sensex crossed the 83,000 level mark, whereas NSE Nifty was easily able to break into 25,400 level mark

Among sectors, metals emerged as the top performer. Nifty Metal was up by nearly 3 per cent. From the Sensex pack, Bharti Airtel, NTPC (National Thermal Power Corporation), Mahindra and Mahindra, JSW Steel and Adani Ports were among the top gainers on the Dalal Street.

The initial days of September proved to be quite volatile for benchmark indices owing to mixed global cues coupled with the upcoming interest rate decision by the Federal Reserve in the week ahead. Check out what led to the rally in domestic markets-

1. FIIs Turning Buyers

Foreign institutional investors (FIIs) made a shift by turning into buyers after heavy selling during the past months. "FIIs turning buyers in the cash market during the last three days is an indication that the market will continue to be resilient," said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

While DIIs (Domestic institutional investors) purchased shares valued at Rs 231 crore, FIIs also followed a similar trail and net bought shares worth Rs 1,755 crore on September 11, according to the provisional data available on the the National Stock Exchange.

2. Bharti Airtel Partnership

Bharti Airtel was the top performing heavyweight on Thursday. The shares of the telecom company hit a new all-time-high at Rs 1,652.80 price level and surged by more than 4 per cent on the National Stock Exchange.

Bharti Airtel is planning on expanding its global reach by partnering with Italy’s Sparkle to access capacity on Blue-Raman Submarine Cable System, which connects India and Italy. The two companies will also collaborate on new business opportunities and projects in the Indian subcontinent, "leveraging their respective cable infrastructures."

3. Global Markets

The larger rally also came after an upbeat trend in Asian markets and a tech-driven rally on Wall Street overnight. Wall street's beloved stock, 'Nvidia' surged by nearly 8 per cent on NASDAQ.

"The markets further gained strength on news of China cutting rates by 50 bps on $5 trillion mortgages as soon as this month to boost consumption came out ahead of a European Central Bank (ECB) policy meeting later in the day; providing much needed sentimental boost to the markets," said Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers.

4. Plummeting Oil Prices

Global crude oil prices continued to decline due to weakening demand and OPEC (Organization of the Petroleum Exporting Countries) losing its market share. While the demand from China, the largest importer of oil, is already faltering, the current factors signalling a slowdown in the US economy can further put pressure on oil prices.

Many D-street analysts believe that the declining oil prices can augur well for certain sectors of the Indian stock market.

"For industries that rely heavily on oil, such as transportation, manufacturing, and energy, lower oil prices can reduce production costs. This can boost profitability and improve stock prices. Also, falling oil prices can help mitigate inflationary pressures, positively affecting the overall economy and eventually the stock market," said Amit Goel is a Co-Founder and Chief Global Strategist at Pace 360.