Sensex surges 465 points, Nifty gains 1.4%; three key factors behind the rally

By: |
Published: January 15, 2019 4:59:53 PM

The share market had opened higher, and extended rally in the afternoon trade as investors were upbeat with expectations of a rate cut, after CPI inflation came in at an 18-month low, and China signalled stimulus measures to lift the economy. We take a closer look.

Share Market Movement, CPI, WPI, Reliance Industries, Infosys, Wipro, Industrial Production, IIP, NSE, BSE, Sensex, NiftySensex ended 464.77 points higher at 36,318.33, while Nifty added 1.39% to 10,886.80. (Image: Reuters)

The domestic stock markets– Sensex and Nifty– rallied on Tuesday on the back of a confluence of favourable domestic as well  as global factors. Sensex ended 464.77 points higher at 36,318.33, while Nifty added 1.39% to 10,886.80. The share market had opened higher, and extended rally in the afternoon trade as investors were upbeat with expectations of a rate cut, after CPI inflation came in at an 18-month low, and China signalled stimulus measures to lift the economy. We take a closer look at three key factors behind the rally.

Cooling inflation lifts sentiment

Investor sentiment got a big fillip after retail inflation dropped to an 18-month low of 2.19% in December, creating headroom for the Reserve Bank to ease monetary policy next month. Another set of official data showed that the wholesale inflation too eased to an eight-month low of 3.80% in December. “Domestic market was buoyed by broad-based buying across all sectors and particularly led by rate sensitive sectors on the expectation of a probable rate cut considering that Index of Industrial Production for the month of November slumped to mere 0.5 per cent while CPI inflation eased for a 6th straight month to 2.19 per cent in December,” Paras Bothra, President, Equity Research, Ashika Group told PTI.

Also read: Amitabh Kant says India needs to create 2-and-a-half Americas in next 50 years; here’s why

China plans stimulus measures

Asian stocks pulled ahead on Tuesday, led by a bounce in Chinese shares as Beijing signalled more supportive measures to stabilise a slowing economy, setting the tone for investors back home. China’s state planner said on Tuesday it will aim to achieve “a good start” in the first quarter for the economy in a signal of more growth-boosting steps, Reuters reported. State television also quoted Chinese Premier Li Keqiang as saying the government is seeking to establish conditions helpful to meeting this year’s economic goals, added the report.

IT heavyweights rally after Rupee slump; bluechips surge

Information technology heavyweights Infosys and TCS zoomed in trade on Tuesday, helped by a slump in rupee. Infosys share price surged by more than 3.6% to close at Rs 726.55, while TCS shares ended 2.7% higher at 1,864.20. The rupee depreciation is considered to be beneficial for IT companies, as they majorly export their software services and make gains in dollar. Apart from IT majors, Mukesh Ambani-led Reliance Industries and HDFC twins rallied between 1-3%, contributing to about 60% of the Nifty gains.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.