Sensex gains 1% after 5-day slump: What's driving today's rally
The BSE Sensex and NSE Nifty staged a sharp recovery today, after a steep 5% fall over the last week. The recovery was mainly fueled by positive global market trends and a slight dip in US inflation data. By noon, the Sensex had jumped nearly 0.9% to 78,690 points while the Nifty had surged nearly 215 points to cross 23,800 points. Blue-chip stocks witnessed heavy buying today.
US inflation data and technical factors influence market recovery
The US Commerce Department's report of a modest 0.1% rise in November's CPI inflation over October signaled a major easing in price pressures. The news came just after Federal Reserve Chair Jerome Powell hinted at only two key interest rate cuts in 2025, down from four projected earlier. Further, market analysts indicated technical factors were supporting the Nifty index's recovery.
Global cues and domestic factors contribute to market rally
Asian markets also saw a strong rise in indices in Seoul, Tokyo, Shanghai, and Hong Kong today. US indices including the S&P 500, Dow Jones Industrial Average, and Nasdaq also gained over 1% on Friday. Raghvendra Nath from Ladderup Wealth Management commented on this development saying that "this bounce-back in India's benchmark indexes was expected after the sharp drop last week."
Metal stocks surge amid safeguard duty investigation
Shares of metal companies, especially steelmakers, soared after the Directorate General of Trade Remedies (DGTR) initiated an investigation into the steel industry's demand for a 25% safeguard duty on imports. Stocks of leading steelmakers gained 1-2% in early trade, pushing the Nifty Metal index to gain over 1%. This development played a major role in today's market rally.
US government shutdown averted, boosting investor optimism
Investor optimism was further boosted after the US Congress passed spending legislation on Saturday, preventing a government shutdown. The development alleviated concerns over potential disruptions, enhancing market sentiment worldwide. However, analysts have cautioned that a sustained market rebound is only possible with signs of an economic growth revival. Ajit Mishra from Religare Broking noted that participants will closely monitor FII flow trends and global market performance for direction.
