Sensex RisesNearly 1% Surge, Nifty Climbs Back Above 19,150; Factors Driving the Stock Market Rally

On November 2, there was a significant bullish momentum on Dalal Street as both benchmark indices, Nifty and Sensex, registered close to a 1% increase. The market was uplifted by the decision of the US Federal Reserve to maintain interest rates at their current levels. This move helped alleviate risk-off sentiment in the domestic equities market, with Fed Chair Jerome Powell suggesting that the central bank might have concluded its most aggressive tightening cycle in four decades. Sensex surged by nearly 600 points, while the broader Nifty surpassed the 19,150 mark, tracking positive trends in global markets.

The statement by Fed Chair Jerome Powell, emphasizing that “despite elevated inflation, the longer-term inflation expectations remain well anchored,” was interpreted by the market as somewhat dovish. Consequently, bond yields experienced a significant drop, and the market responded positively to this development, according to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Key Factors Contributing to the Market Uptrend

1. Global Markets: Jerome Powell’s shift to a more dovish stance was well-received in the US markets, with the S&P 500 index surging over 1%, briefly crossing its 200-day moving average on November 1. The Dow Jones Industrial Average also rose by 0.67%, and the Nasdaq Composite added 1.64%. Additionally, in Australia, the S&P/ASX 200 climbed by 1.20%, nearing its highest level in almost two weeks.
2. Bond Yields: The 10-year US Treasury yield dropped below 4.75% for the first time in two weeks, a trend that was initially triggered by the Treasury Department’s decision to slow the pace of increase in long-term debt sales.
3. Rupee Strengthens: The Indian rupee appreciated by 8 paise, reaching $83.20 against the US dollar in early trading on November 2. The dollar index, which measures the greenback’s performance against a basket of six major world currencies, fell by 0.5% to 106.34.

Nifty Technical View

Looking at the technical aspects, Jay Thakkar, Head of Alternate Research, Capital Market Strategy at Sharekhan by BNP Paribas, stated, “In the short term, Nifty faces a strong resistance at 19,200, with support at 18,800. Therefore, the range for the weekly expiry is expected to be between 18,800 and 19,200.” He also noted that the Bank Nifty has a robust resistance at 43,000, support at 42,500, and further support at 42,000 levels, cautioning that the recent bounce might be a temporary one.

Investor Considerations

Vijayakumar suggests, “There is a possibility that Foreign Institutional Investors (FIIs), who were consistent sellers in October, may become buyers. If this happens, short-covering could drive the market higher, despite uncertainties related to the Israel-Hamas conflict. From a valuation and growth perspective, leading banks offer attractive buying opportunities, and the IT sector may stage a comeback.”