Sensex Jumps 1,000 Points, Nifty Crosses 24K: 3 Key Drivers Behind Stock Market Rally

Sensex, Nifty Today: The Indian stock market witnessed a strong rally on Monday with benchmark indices climbing on the back of in-line Q4 results. BSE Sensex was trading above the psychological 80k level mark after a 1,000-point surge. NSE Nifty followed cues and surpassed 24,300 level. Sectorwise, Nifty PSU Bank came out on top as the best-performing index, surging over 2.4% whereas the IT index remained under stress owing to turbulent macros.

From the Sensex pack, Reliance, SBI, Sun Pharma, Axis Bank and Tata Steel were among the top gainers. The Mukesh Ambani-led conglomerate even became the first Indian company to cross Rs 10 Lakh Crore networth. HCL Tech, Ultra Cement, Bajaj Finance, Infosys, HUL and TCS were among the top losers on Monday.

Here are 3 reasons that drove the stock market rally.

1.FIIs Continue Buying Spree

Foreign investors continued their buying spree giving a boost to the overall investor sentiment on D-street. This was largely owing to looming concerns around a prospective slowdown in the US economy.

"The major factor contributing to the resilience of the market is the sustained buying by FIIs which has amounted to Rs 32465 crores in the last eight days. FIIs have turned sustained buyers in a dramatic reversal of their sustained selling strategy. This, in turn, is due to the relative underperformance of US stocks, US bonds and dollar," said VK Vijayakumar, chief investment strategist, Geojit Investments. Analysts believe that the weakening of the US economy and a depreciating dollar might push FIIs to continue their buying spree.

2.Trade War Tensions

While the US administration has already hinted at striking a trade deal with China, there has been no concrete action on the same yet, except some war of words.

The dragon has even denied any discussions taking place. "China and the US are not having any consultation or negotiation on tariffs. The US should stop creating confusion," the Chinese Embassy in Washington reportedly said last week.

This is further adding to the overall confusion, making emerging market equities attractive. This was quite evident earlier this month when the US bond yields surpassed 4.5%.

3.Reliance Shines

After a sharp market correction, the Indian stock market has recovered a significant portion of the overall downtrend. Even though the recent Q4 results are soft, they are largely in line with what D-street was expecting.

Reliance's Q4 results remained strong, surpassing D-street estimates. The conglomerate has also exceeded a net worth of Rs 10 lakh crore, further boosting overall sentiment on the Street.