Sensex jumps 396 pts, Nifty above 11,550; key factors that drove rally

A drop in crude oil prices and broadbased buying across sectors pushed the domestic equity indices higher on Thursday. Some positive domestic macro data, a stronger rupee and good news on the US-China trade war front helped investor sentiments.

The bulls flocked the market to buy auto, banking and financial services stocks, propelling Nifty over 131 points and Sensex 396 points.

Experts see the current phase of the market as an opportunity to buy. “The market witnessed profit booking on Wednesday. It is taking a breather, which is a healthy sign. This gives investors an opportunity to buy,” said Siddharth Sedani, Vice President for Equity Advisory at Anand Rathi Shares & Stock Brokers.


So what’s driving your market today. Going by the buzz on Dalal Street, here is a list of four factors driving market momentum:

Global Cues
Global cues tuned supportive, with most of the Asian markets trading higher amid optimism that the US and China will reach a trade deal soon. This helped offset worries about a US Presidential impeachment. US President Donald Trump said on Wednesday a deal to end a nearly 15-month-long trade war with China could materialize sooner than people expect. This comes a day after he had criticised Chinese trade practices.

In addition, the US and Japan signed a limited trade deal on September 25, under which Japan will open new markets to about $7 billion worth of US agricultural products. Besides, Japan will provide final August numbers for machine tool orders later in the day.

Macro data
Some support came in from the latest payroll data of Employees' State Insurance Corporation (ESIC), which showed addition of around 14.24 lakh jobs in July, higher than 12.49 lakh reported for the previous month. According to NSSO data released in May, the unemployment rate in India was over 6 per cent.

Ease in regulation for FPIs
Traders took some encouragement from reports that market regulator Sebi was planning to ease the regulatory framework for foreign portfolio investors. The market regulator has simplified KYC requirements and permitted them to carry out off-market transfer of securities. Besides, the regulator has decided to classify FPIs into two categories instead of three.

Falling crude oil prices
Global oil futures benchmark Brent has been on a downturn this week. On Wednesday, the prices fell further 1 per cent after US crude stockpiles rose and Saudi Arabia reported a faster-than-expected recovery in oil production. Brent crude traded at September 9 level, just over the $62 mark.