Sensex Soars Over 1,000 Points, Nifty Races Past 23,600: 4 Factors Behind the Rally

Sensex up: The Indian stock market witnessed another rally on Monday as investor sentiment remained positive. Benchmark indices, Sensex and Nifty, surged by over 1.4%. BSE Sensex closed the trading session at 77,984 level, up by over 1,0788 points. Meanwhile, NSE Nifty surpassed 23,600 level mark, marking an increase of 307 points.

All sectors were trading in green with NIFTY PSU Bank logging the highest gains. The sectoral index surged by over 3% or 195 points.

NTPC, Kotak Mahindra Bank, SBI, Tech Mahindra, PowerGrid and Bajaj Finserv were among the top gainers. Whereas, Titan, Indusind Bank, Zomato, Mahindra and Mahindra, Bharti Airtel and Nestle India were among the top losers.

FIIs Turn Buyers

After an elongated period of foreign capital outflow, FIIs finally became net buyers this month. Strong domestic macros and the Federal Reserve's slower-than-expected growth outlook for the US economy might have driven this shift.

"After relentless selling, FIIs turned buyers during a few days last week with a big buy figure of Rs 3255 crores through the exchanges on 21st March. The intensity of FII selling had started declining earlier. The total FII selling in March through 21st March stood at Rs 31718 crores," said VK Vijayakumar, Chief Investment Strategist, Geojit Investment Services.

Fall in Dollar Index

The dollar index, which tracks the greenback against six major global currencies, remained under pressure. Meanwhile, the domestic currency strengthened against the US dollar. Improving macros and renewed FII buying might have triggered the unwinding of speculative long-dollar positions.

Last week, the Rupee appreciated by over 38 paise to close at 85.98 against the dollar owing to positive sentiment across the equity market.

Positive Macros

"Improving macros of the Indian economy and fair valuations have turned FIIs from sellers to buyers. More importantly, this has triggered massive short covering leading to sharp spikes in prices. Even though the undertone of the market is bullish investors have to be careful," said Vijayakumar. Recently, Fitch raised its GDP forecast for FY27, maintaining it at 6.5%.

Meanwhile, domestic inflation has eased below the RBI’s 4% target, providing some relief.

Technical Indicators

On the weekly chart, Nifty has broken out of a falling trendline and formed a strong bullish candle at the 23,400 level, aligning with the 1.618 Fibonacci extension, as per analysts.

"A sustained move above 23,000 could drive the index toward 24,000 and 24,500 in the short term, with any dips presenting buying opportunities," said analysts at Choice Broking.

"RSI has reversed strongly from the oversold region and is trending upward, confirming strengthening momentum. Additionally, Stochastic RSI shows a positive crossover, and the price is trading above the 20, 50, and 100 EMAs, reinforcing the bullish outlook," the brokerage firm said.