Sensex rallies 442 pts, Nifty nears 11,700: Five factors that drove the rally

Stock benchmarks Sensex and Nifty showed full of promise on Monday as they kicked off the week in style.

The 30-share Sensex rallied over 442 points to 38,694.11 while the 50-share Nifty jumped 135 points to 11,691.95.

Going by the buzz on Dalal Street, we gathered five factors that are seen to have fuelled the current bout of rally.


Firm global cues: Asian peers extended their advance, taking cues from record highs on Wall Street. The dollar remained under pressure after the head of the Federal Reserve suggested that it would not speed up its pace of raising interest rates. Jerome Powell said the US economy was healthy and prices showed no signs of rising more than the bank's 2 percent target, adding that there appeared to be no risk of overheating.

FTSE push: India's weightage in FTSE Emerging Markets is set to rise to 12.21 per cent from 12.16 per cent, ET Now has reported. According to ET Now, L&T Infotech, Bajaj Holdings and Bandhan Bank have been added to the index. ICICI Prudential life and Petronet LNG have also been added to the index.

Sustained inflows: Foreign portfolio investors poured over Rs 2,000 crore in August so far. Their net investment stood at Rs 2,263.92 crore in July against net outflows of Rs 4,831 crore and Rs 10,060 crore in June and May, respectively. Domestic institutional investors invested over Rs 5,000 crore in equities so far this month. Their net investment stood over Rs 70,000 crore on year-to-date basis.

Positive outlook: Global credit ratings, research, and risk analysis firm Moody's Investors Service expects the Indian economy to grow by around 7.5 per cent in 2018 and 2019. However, the company expects the country's economy to grow at a higher rate of 7.7 per cent in the first quarter of 2018. “We expect the Indian economy to grow around 7.5 per cent in 2018 and 2019," Moody's Investors Service said in its Global Macro Outlook: 2018-19 (August 2018 Update) report.

Niti Aayog former vice-chairman Arvind Panagariya has said rupee depreciation was long overdue, saying the appreciated currency had hurt the country's exports. Panagariya further said India's macroeconomic management is sound and there was no reason to worry.

The rupee on August 16 slumped to a life-time low of 70.32 against the dollar on strong demand for the greenback. Panagariya said he expects India's growth rate to cross the 8 per cent mark by third or fourth quarters of 2018-19.

All-round buying: Barring Wipro (down 0.09 per cent), other components of the BSE Sensex were in the green. Power Grid rallied 3 per cent, followed by YES Bank (2.14 per cent), State Bank of India (up 1.70 per cent), Bharti Airtel (up 1.40 per cent), ICICI Bank (up 1.39 per cent) and Kotak Mahindra Bank (1.37 per cent).