It isn’t just raining across the country but it is raining gains too for the investors. The Indian stock market is in full celebration mode today. Both the benchmark indices are extending strong gains in early trade.
The Sensex surged over 1,000 points or 1.2% to hover around 81,600 in the intra-day trading session. Similarly, the Nifty crossed the 25,000 mark, gaining nearly 370 points or 1.5%.
Let’s take a look at the 5 key reasons why the market is rallying today-
Spotlight on Auto stocks
One of the major factor of today’s rally has been the auto sector. The Nifty Auto index surged more than 4% in today’s trading session, with every constituent stock trading in the green.
Looking at the stock performance in the Auto index, Hero MotoCorp, Maruti Suzuki, and Ashok Leyland led the charge with a surge of over 7% each.
This was followed by TVS Motor, Bajaj Auto, and Mahindra & Mahindra, all climbing more than 4%.
Apart from the auto stocks, this upbeat momentum spilled into other pockets of the market as well. The financial services and FMCG were up around 2%, while consumer durables gained 3%. Metals too held firm with a 1% rise.
Broad-based buying across indices
The rally is not just limited to autos. The mid- and small-cap segments also witnessed strong participation. The BSE MidCap index jumped over 500 points, while the SmallCap index advanced nearly 500 points.
Policy boost from GST reform
A major booster for this rally in today’s trading session came from Prime Minister Narendra Modi’s Independence Day address, where he announced sweeping changes in the GST regime to be rolled out by Diwali. The government is considering a simpler two-slab structure to replace the current four-tier system.
Sovereign rating upgrade adds to optimism
The rally also drew strength from S&P Global Ratings upgrading India’s sovereign credit rating to ‘BBB’ with a stable outlook, the country’s first upgrade in nearly two decades. The agency highlighted India’s strong growth trajectory, prudent monetary policy, and better quality of government spending.
In its note, S&P added that India’s reliance on domestic consumption makes it more resilient to external shocks.
Global cues and geopolitical watch
Asian markets traded mixed with Japan’s Nikkei scaling new highs, while European and US stock futures pointed higher. Market watchers are also keeping a close eye on the high-level meeting between US, EU, and Ukraine leaders.
“The world is looking for geo-economic cues from the White House meeting between US-EU-Ukraine leaders on Monday,” said market veteran Ajay Bagga. He added that despite lingering trade tensions, a potential thaw in Russia-related negotiations could bring relief to global markets.
“India has two positives, one watchful and one negative cue this morning. The two positives are – a) the GST cuts within the next 50 days announced by the PM during his Independence Day speech, b) the Sovereign Rating upgrade for India announced by S&P Global and the subsequent raising of ratings of 16 top Indian corporates/banks and financial firms. The watchful cue is ofcourse the US-EU-Ukraine meeting outcome tonight. The negative is that the US has pulled back from the visit of its trade delegation to India that was to start from August 25th,” he added.