Rs 3.5L crore m-cap added as Sensex surges 900 pts, Nifty tops 24,850; why is the stock market rising?

Indian benchmark indices traded higher amid a broadly stronger Asian market on Friday, buoyed by easing U.S. Treasury yields along with gains in information technology and financial stocks.

The BSE Sensex rose 904 points, or 1.12%, to 81,856, while the Nifty50 advanced 284 points, or 1.16%, to 24,894 around 12:40 pm.
The market capitalisation of all listed companies on BSE surged by Rs 3.5 lakh crore to Rs 442.46 lakh crore.


Nifty IT, Financial Services, and FMCG indices gained 1–2%. Metal, PSU Bank, Consumer Durables, and Oil & Gas also saw gains of around 1%. In the broader market, the Nifty Midcap100 and Smallcap100 rose up to 0.9%.

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Why is the stock market rising today?

While there are no major domestic triggers, analysts attribute the upmove to a “buy-on-dips” strategy amid a supportive global backdrop. U.S. Treasury yields retreated after a selloff prompted bargain buying, easing pressure on emerging markets.

On Thursday, foreign portfolio investors (FPIs) sold Indian equities worth Rs 5,045 crore, citing concerns that a proposed U.S. tax-cut bill would widen the federal deficit. However, the bill’s narrow passage in the U.S. House provided relief, prompting buying interest in global markets.

Asian stocks also edged higher, with the MSCI Asia ex-Japan index rising 0.4% after a 0.9% drop in the previous session.

Despite Friday's rebound, both Sensex and Nifty remain down about 1% for the week.

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Experts View

"After the 14% pullback from the March lows the market is struggling to find direction. It appears that the sustained FII buying, which played an important role in this rally, has run out of steam. The big FII selling on 20th and 22nd of this month indicates that the FIIs may again turn sellers if the global environment turns unfavourable," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

"There are some global concerns arising out of the sharp rise in bond yields in the US and Japan. Particularly the sharp spike in US bond yields, with the 30-year yield touching 5.14 % and the 10-year yield at 4.52%, reflects concerns surrounding the US debt levels and its fallout on global financial markets. It remains to be seen how this pans out," Vijayakumar added.

Hardik Matalia, Derivative Analyst at Choice Broking, said, "Nifty can find support at 24,600 followed by 24,500 and 24,400. On the higher side, 24,700 can be an immediate resistance, followed by 24,800 and 24,900."

Global Markets

Asian shares posted modest gains as bargain buying emerged in U.S. Treasuries following the U.S. tax bill's passage. However, debt concerns linger.

The MSCI Asia-Pacific ex-Japan index inched up 0.4% but was still down 0.4% for the week after five consecutive weeks of gains. Japan's Nikkei also rose 0.4%, supported by data showing the fastest rise in core inflation in over two years.

FII/DII Tracker

The Foreign institutional investors (FIIs) sold equities worth Rs 5,045.36 crore on May 22, while Domestic institutional investors (DIIs) bought equities worth Rs 3,715 crore on the same day.

Crude Oil

Oil prices slipped on Friday, weighed down by a stronger U.S. dollar and the possibility that OPEC+ will further increase its crude oil output.

Brent futures fell 37 cents to $64.07 a barrel by 0015 GMT. U.S. West Texas Intermediate crude futures lost 39 cents to $60.81. Brent was down 2% on the week, and WTI was 2.7% lower.

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Rupee vs Dollar

The Indian rupee fell 15 paise to 86.10 against the US dollar in early trade. The dollar index, which tracks the movement of the greenback against a basket of six major world currencies, declined 0.3% to 99.66 level.

(With inputs from agencies)