It was literally an early Diwali on Dalal Street on Monday as the stock market scaled an all-time peak in intra-day deals. The optimism was led by firm global cues after Democrat Joe Biden defeated Donald Trump in the US Presidential Elections 2020. The S&P BSE Sensex rallied as much as 673 points, or 1.6 per cent to hit a record high of 42,566.34 levels against Friday’s close of 41,893.06. NSE’s Nifty, too, hit a fresh record high of 12,451.80 levels in the intra-day session.
The broader market, too, gained in the trade though it underperformed the frontline indices. The S&P BSE MidCap index was trading 0.75 per cent higher at 15,520 levels, while the S&P BSE SmallCap index was quoting 0.52 per cent higher at 15,298 levels at the time of writing this report.
Here’s a quick look at the top factors that fuelled the market rally on Monday.
Joe Biden wins US polls: Market participants gave a thumbs up to Democrat candidate Joe Biden’s victory in the US Presidential Elections 2020. Biden’s win, according to analysts, will reduce policy uncertainty and paves the way for the much-awaited economic stimulus. “His victory is most likely to be a favourable outcome for markets as it will instill confidence amongst investors by reducing ‘policy uncertainty’ considerably,” analysts at Centrum Broking had said in a November 5 note. “Joe Biden’s victory is positive for risky assets including EM currencies,” the brokerage had added.
Further, a fractured mandate with the Senate being controlled by the Republicans could also be a blessing in disguise for the market as Biden had indicated an increase in corporate taxes. However, given the split verdict, tax increases may not be easy to pass in the Senate, note analysts.
Firm global cues: Stocks across-the-globe rallied on Monday. Wall Street stock futures started strong while the dollar extended its downward trend as risk assets got a boost on expectations of fewer regulatory changes and more monetary stimulus under US president-elect Joe Biden, Reuters reported.
In Asia, China and Hong Kong shares jumped, with the blue-chip index hitting a more than five-year high, as Joe Biden’s victory raised hopes of a thaw in the frosty Sino-American trade relations.
Bank, IT stocks rally: Banking and information technology stocks gained ground in trade. According to market experts, the domestic market could be boosted by a strong rally in bank stocks going ahead. Last week, the Bank Nifty index jumped more than 12 per cent and analysts say the rally could sustain as there is more room for valuation expansion. READ MORE
On Monday, the Nifty Bank index rallied nearly 2 per cent to 27,215 levels with 10 out of 12 constituents advancing.
Besides, IT stocks continued their upward journey. The Nifty IT index traded nearly a per cent higher at 21,683 levels. Biden plans to increase the number of high-skilled visas, including the H-1B, and eliminate the limit on employment-based visas by country, both of which are expected to benefit tens of thousands of Indian professionals impacted by some immigration policies of the outgoing Trump administration, according to a report by PTI. READ MORE
FII inflow: Another major factor that has seen markets rally over the past few sessions is the buying by foreign investors who put in a net Rs 8,381 crore into Indian markets in the first five trading sessions of November. The participants are growing more confident of India in view of the resumption of business activities and better-than-expected quarterly numbers.