A tremendous rise was seen in the Indian stock market on Friday. Due to easing of tensions in the Middle East, reduced expectations of Fed increasing interest rates and other important reasons, both Sensex and Nifty saw an increase of more than 0.8 percent. During Friday’s trading session, the Sensex rose 650 points, while the Nifty 50 index reached above the level of 24,350. Due to this rise, Sensex is trading at its high for almost two months. For the first time since May 7, the Sensex has crossed the level of 78 thousand points. With this tremendous growth, the total market capitalization of all the companies listed on BSE increased by approximately Rs 2.65 lakh crore, taking it to cross Rs 482 lakh crore.
Strong growth in IT shares also continued. Shares of HCL Tech, Tech Mahindra, Infosys and TCS rose 2-5 per cent and led the Sensex gains. After these, shares of Tata Steel, Bajaj Finserv and Bharat Electronics also saw a rise of more than 1 percent. However, contrary to this market trend, M&M shares fell by about 1 percent on Friday morning.
At the same time, the performance of the broader market remained weak compared to the benchmark index. Nifty Midcap 100 index gained only 0.2% and Nifty Smallcap 100 index gained 0.5%. During this period, India VIX (which measures market volatility) fell by more than 1 percent to 12.13. Sector wise, Nifty IT index rose by more than 2 percent and led the rise. Nifty Metal Index also increased by more than 1.5 percent. However, Nifty Auto and Nifty PSU Bank indices recorded a decline. Overall the market trend was positive. On NSE, an increase was seen in 1,832 shares and a decline in 607 shares, while there was no change in 91 shares. Let us also tell you those 7 reasons due to which there has been a rise in the stock market…
1) Concerns about Fed raising interest rates reduced
Data released on Thursday showed that the pace of job growth in America slowed down significantly in June and payroll figures for the last two months were also reduced. This indicated sluggishness in the labor market and the financial market reduced expectations of interest rate increases in the near future. The unemployment rate fell to 4.2% last month from 4.3% in May as many workers dropped out of the labor force, pushing the participation rate to its lowest level in more than five years. According to CME Group’s FedWatch tool, traders now believe there is a 46.8% probability that the US Central Bank will keep rates steady at the September 15-16 meeting, compared to 35.8% a day earlier.
2) Rupee opened with gains
In early trade, the rupee rose by 18 paise to 95.17 against the US dollar. This happened due to the weakening of the US dollar after the weak jobs report. The dollar index, which measures the dollar’s movement against several currencies, fell 0.2% to 100.77, after falling 0.5% on Thursday. It is heading for its biggest weekly decline since the beginning of April.
3) FII withdrawals reduced
According to preliminary data from NSE, foreign investors sold shares worth about Rs 312 crore on Thursday, making them net sellers of Indian shares. This is much lower than the huge FII withdrawals seen during the ongoing war in the Middle East earlier this year.
4) Huge buying in IT shares
The market mood has improved due to huge buying in big IT stocks like HCL Tech, TCS and Infosys. After falling to a new 52-week low earlier this week, IT stocks are on the rise today. IT companies earn a large part of their revenue from the North American market. Increase in interest rates or increase in inflation in the US may affect people’s non-essential spending, which may also impact the growth prospects of this sector. Therefore, IT stocks are rising due to low expectations of Fed raising interest rates and low valuations.
5) Good signals from global market
Today, Dalal Street is also showing momentum like the global markets. South Korea’s Kospi rose 2.5% on Friday morning, while Japan’s Nikkei was up about 1%. Hong Kong’s Hang Seng and China’s Shanghai Composite also increased by about 1-1%. On Wall Street, the Dow Jones Industrial Average rose more than 1% on Thursday to a record closing high, marking its fourth consecutive week of gains. Yesterday European markets also closed with good gains.
6) Iran-US peace efforts
“No news is good news” – this is the essence of today’s market situation. Peace efforts in the Middle East have been successful so far and there is no news of increasing tension. All this has happened after the peace talks between Iran and the US in Doha earlier this week.
Iran is now preparing for a days-long funeral for the late Supreme Leader Ayatollah Ali Khamenei, whose death in early March sparked a deadly war. Meanwhile, US President Donald Trump has claimed that Iran has accepted almost all the US conditions in the ongoing diplomatic talks, and he also stressed that the main objective of the talks is to prevent Tehran from acquiring nuclear weapons.
7) Oil prices
Oil prices rose slightly to $72 per barrel, but remain near pre-war levels due to successful peace efforts. Reuters quoted sources on Thursday as saying that Kuwait’s oil production increased from 580,000 barrels per day (bpd) in May to 1.65 million barrels per day in June, as the OPEC member country increased exports after the US-Iran interim peace deal. According to Reuters report, at least five supertankers loaded with about 10 million barrels of oil from Saudi Arabia have passed through the Strait of Hormuz. Also, Saudi Aramco is adopting the method of spot pricing to increase sales in Asia.
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