Trump takes a hit, D-St bulls score big! Sensex zooms 1,600 pts, m-cap swells by Rs 8 lakh crore. 7 reasons behind today's market rally

The Indian stock market kicked off Thursday with a blistering rally, as Sensex and Nifty surged nearly 2%. The Democrats' gains in the US midterm elections, marking a setback for Trump, along with easing oil prices and other positive cues, fuelled a fresh bull charge on Dalal Street, extending the market's recovery streak this week.

Sensex jumped over 1,600 points to soar above 78,900 while Nifty 50 rallied over 450 points to cross 24,400. The sharp gains added around Rs 8 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to Rs 501 lakh crore.

IndiGo shares soared more than 6% to lead gains on Sensex, while Maruti Suzuki, Asian Paints, Bajaj Finance, M&M, L&T, UltraTech Cement, HDFC Bank, Axis Bank, Bajaj Finserv, ICICI Bank, TCS, Infosys and HCL Technologies shares gained 2-4% to follow.


Broader markets also rallied, with Nifty Midcap 100 and Nifty Smallcap 250 indices jumping up to 1.5%. This came as India VIX, which measures volatility in the market, dropped 2.5% to fall below 15.

Among the sectoral indices, Nifty Auto, Nifty Financial Services and Nifty Realty jumped more than 2% each to lead gains, while Nifty Pharma slipped into the red. The overall market breadth strongly favoured the bulls, with NSE seeing 2,468 advances against 313 declines, while 55 stocks remained unchanged.

Here are the 7 key factors boosting the Indian stock market today.

1) Oil prices drop below $95/barrel

The biggest factor that is amplifying the ongoing rally on Dalal Street is perhaps the sharp drop in crude oil prices which fell below the crucial psychological mark of $100 per barrel after several weeks, and then continued to fall further, breaching the $95 per barrel mark as well.

Brent crude futures were trading below $94 per barrel while WTI crude futures traded below $87 per barrel on Thursday morning. This marks nearly 10% fall in oil prices since the previous day.

Read More: Crude oil falls below $94 after 9% plunge on Wednesday after midterm results. More downside ahead?

2) Middle East conflict resolution hopes rise after Trump’s midterm election loss

US President Donald Trump’s Republican party lost control over both the houses of Congress, the Senate and House of Representatives. This came after the war in Iran spiked energy prices, with Americans beginning to feel the pinch in their pockets. In a lengthy post after the party’s election defeat, Vice President JD Vance acknowledged that voter dissatisfaction over the war and the US-Israel relationship had contributed to the Republicans' poor performance. Senate Minority Leader Chuck Schumer, a Democrat, meanwhile pledged to bring the war to an end soon.

This retriggered hopes for a conclusion to the Middle East conflict that has been raging since late February this year following US and Israel’s joint military strikes on Iran, killing its former supreme leader, triggering a massive surge in oil prices and rattling global stock markets.

3) Bond yields drop

Bond yields dropped following the sharp fall in oil prices. The yield on the 30 year US Treasury notes dropped to 5.2%, while that on the benchmark 10-year notes fell to 4.8%. The 2-year US bond yields, which move in tandem with Fed’s rate decision expectations, also eased to 4.5%.

Bond yields move inversely to bond prices. The easing oil rates encouraged buying in bonds, which in turn reduced bond yields. Falling bond yields are typically considered a positive equity market as they make the riskier but higher-return stocks more attractive that the debt market to investors.

4) Rupee hits 2-week high

Rupee opened at a two-week high, rising 0.3% to 94.35 against the US dollar. This came as oil prices slumped. “Going ahead, sustained foreign fund inflows and continued dollar weakness could provide further support to the rupee, keeping the outlook positive towards the 94.50 level.” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.

5) Trump tariff tantrum worries ease

Democrats’ sweeping victory over the Congress also sparked hopes of keeping US President Donald Trump’s often irrational decisions in check. Experts said that Trump’s defeat in the midterm elections can significantly ease pressure on New Delhi in negotiations for a balanced trade deal with Washington.

Going forward, the setback to Trump's second term in office, with the Democrats seizing control of the House and the Senate, could henceforth provide greater clarity on tariffs and market access, helping drive India's exports to the US, experts said.

Also read |Democrats' US midterm sweep may give India more room to negotiate a balanced trade deal with Trump

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