The markets have gained momentum in afternoon trade. The Sensex surged over 1,000 points and the Nifty clocked brisk 1% gains and is now nearing 26,200 levels. The broader markets too mirrored the optimism. The BSE Small and Midcap Indices is up over 1% each. The big sectoral gainers include metals, tech and auto, banks.
Nearly 2,300 stocks are trading in the green and the breadth is firmly in favour of the gainers. The gains are particularly impressive after Tuesday’s volatile session. Shrikant Chouhan, Head Equity Research, Kotak Securities highlighted the key levels to watch for the markets on the upside- “On the higher side, a successful breakout above 26,050/85200 could push the market towards 26,150-26,200/85,500-85,700. The ideal strategy is to buy Nifty at 25,950 and at 25,800; however, it is mandatory to keep a stop loss at 25700 levels.”
3 reasons why the markets are rallying today
Here is a detailed check on why the markets are rallying today –
1. Global markets positive
Japan’s Nikkei surged 2% with tech stocks leading the charge in a broad-based rally after Wall Street closed higher overnight. The Nikkei closed 1.9% higher while the broader Topix gained 2%. Across the continent in US, Wall Street extended its rally after a spate of economic data appeared to support the case for the US Federal Reserve to implement its third and final rate cut of the year in December.
2. Fed rate cut optimism
The key reason why the US markets rallied is on the back of increased expectation for a rate cut. The economic data coming out of US seems to be supporting a possibility of rate cut by the US Fed. This also supported optimism about a possible rate action by the Reserve Bank of India.
ccording to market veteran Ajay Bagga as shared to ANI,”The RBI MPC meet on Dec 5th will be watched closely for a possible monetary stimulus via a rate cut. The US-India trade deal remains the one catalyst that could help the Indian markets break through the resistance provided by the 2024 record highs which have not been breached on a closing basis yet.”
3. Improving fundamentals
The other positive bit of news for investors are latching on to is the improving macro fundamentals. The Q2 GDP data is set to be released on November 28, and this is expected to be a 7% plus print. Food prices, a major component of India’s inflation basket, have seen sustained deflation, and GST rate cuts have further eased price pressures to a certain extent.
How should investors trade?
The big question is what’s the right strategy now? Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said, “The best strategy for retail investors is to refrain from trading and slowly accumulate fairy-valued high quality growth stocks which will be available at attractive valuations due to heightened volatility. Such stocks will bounce back soon. Investors’ psychological behaviour is more important in such contexts. Fundamentals indicate that the market is moving to a new high: It’s only a question of time. Investors’ response should be based on this understanding.”