In what could be the beginning of a Santa Rally on Dalal Street from today, equity investors were left richer by Rs 5.5 lakh crore as the market capitalisation of all listed companies on the BSE shot up to Rs 277.6 lakh crore.
Here are the 5 key factors driving the stock market rally:
1) Santa Rally
Only time will tell whether we are on Day 1 of the Santa Rally on Monday. However, history shows that there is an 85% chance of investors being gifted with a Santa Rally.
During this period of 7 trading sessions, Nifty has given a 2% average return in the last 21 years since 2001-2002. There have been only 3 instances in 2013-14, 2015-16, and 2017-18 when the index spoiled the festive mood.
2) Short covering
Analysts say that Friday’s sell-off was triggered by HNIs and retail which, in turn, triggered margin calls in momentum stocks that led to steep cuts in these segments.
Anand James, Chief Market Strategist at , said short covering was highly likely this week. “Usually, such an event takes a while to recoup. However, the losses have been unilateral, with 87% of F&O stocks witnessing long unwinding and 89% of NSE stocks witnessing at least 5% losses from the last week’s high. This signals that fear is at an extreme. Usually, such situations see a rebound,” he said.
3) Global markets
On Friday, the S&P 500 closed 0.6% higher as investors assessed inflation data against rate hikes and recession fears. Wall Street would be shut for a Christmas holiday today.
In Asian markets, trading was thin with Hong Kong, Sydney, and several other places shut. Tokyo’s Nikkei 225 index gained 0.6% to 26,393.32 and the Kospi in Seoul added 0.2% to 2,318.54. The Shanghai Composite index rose 0.5% to 3,061.93 and the SET in Bangkok added 0.6%.
4) DII buying
On Friday, when the FIIs sold Rs 706.84 crore worth of Indian stocks, domestic institutional investors were busy making the most of the correction. NSDL data shows that DIIs were net buyers to the tune of Rs 3,399 crore on Friday.
5) Technical factors
Nifty formed a bearish candle on the weekly charts. Analysts said the key resistance level for Nifty50 stood at 18,100 and on the downside 17,500 can act as strong support.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
