A day after suffering strong losses of over 1% each, the headline indices, the Sensex and the Nifty 50, rebounded with healthy gains on Friday, February 20.
The 30-share pack Sensex gained 317 points, or 0.38%, to end at 82,814.71, while the Nifty 50 settled at 25,571.25. up 117 points, or 0.46%. The BSE 150 MidCap Index climbed 0.44%, while the BSE 250 SmallCap Index slipped 0.19%.
The overall market capitalisation of BSE-listed firms rose to ₹467 lakh crore from ₹465 lakh crore in the previous session, making investors richer by about ₹2 lakh crore in a single session.
Why did the stock market rise? 5 key factors behind the rally
Experts highlighted the following five key factors behind the market rally today:
1. Short covering in select heavyweights
Experts said market participants are accumulating select heavyweights across sectors, including Reliance Industries, Larsen & Toubro, and Bajaj Finance, as the market’s medium-term outlook remains healthy amid expectations of an earnings recovery and favourable growth-inflation dynamics.
2. Rupee stays below the 91 mark
The rupee closed at 90.9825 per dollar, down 0.3% on the day and 0.4% for the week after crude oil prices surpassed the $72 per barrel mark- a six-and-a-half-month high. However, likely intervention by the Reserve Bank of India (RBI) saved the rupee from falling below the key 91 per dollar mark.
3. Underlying sentiment remains positive after healthy Q3 earnings
Q3 earnings season ended slightly better than expected, fanning hopes that the worst in earnings may be behind and that the coming quarters will show even better corporate profits.
According to brokerage firm YES Securities, Q3 revenue of NSE 200, excluding financials and OMC, grew 11.9% YoY, surpassing the nearly 7.8% average run rate over the past eight quarters.
“Amidst the many crises, the strength of the Indian economy and the recovery in corporate earnings as reflected in Q3 numbers, are positives for the market,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
4. Valuations come to fair levels
Experts highlight that valuations of large-caps have come to fair levels after the recent correction, which is attracting domestic and global investors to them.
As per brokerage firm PL Capital, valuations have moderated to around 19–20 times price-to-earnings (PE), improving the risk-reward profile meaningfully after the recent correction.
“India’s premium to emerging markets has compressed materially, improving relative attractiveness from a medium-term perspective. While valuation normalisation alone may not drive an immediate market re-rating, it provides a more favourable entry point as earnings visibility improves,” said PL Capital.
5. Healthy buying in bank, metal, and FMCG counters
Healthy buying in banks, metals, and the FMCG sectors drove the market benchmarks higher. Around 1:30 pm, Hindalco, HUL, Tata Steel, and JSW Steel were among the top gainers in the Nifty 50 index. The Nifty Bank index was 0.60% up, while FMCG was trading 0.70% higher at that time. The Nifty Metal index was 1% up.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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