The Indian stock market witnessed a remarkable surge on February 4, with the Sensex rising by over 1,400 points and the Nifty 50 surpassing the 23,750 mark during intraday trade.
The rally was supported by strong buying across sectors, lifting investor sentiment and increasing market capitalisation.
The Sensex opened higher at 77,687.60 compared to its previous close of 77,186.74 and climbed to an intraday high of 78,658.59. The Nifty 50 also showed a strong performance, opening at 23,509.90 and rising to 23,762.75.
By the end of the trading session, the Sensex closed 1,397 points, or 1.81 per cent, higher at 78,583.81, while the Nifty 50 gained 378 points, or 1.62 per cent, closing at 23,739.25.
Mid and small-cap stocks also gained momentum, with the BSE Midcap index rising by 1.35 per cent and the BSE Smallcap index gaining 1.20 per cent.
The overall market capitalisation of firms listed on the Bombay Stock Exchange (BSE) increased significantly, crossing ₹425 lakh crore from ₹419.5 lakh crore in the previous session. This sharp rise in market value resulted in an estimated gain of ₹5.5 lakh crore for investors in a single trading session.
Sectoral indices contributed to the broad-based rally, with strong gains across financial, oil, metal, and technology stocks. The Nifty Bank index surged by 2 per cent, while PSU and private bank indices also showed a similar upward trend.
The Nifty Oil and Gas index rose nearly 3 per cent, while the metal, pharmaceutical, and IT indices gained over 1 per cent each.
Analysts attributed the market’s sharp rise to several key factors that influenced investor sentiment. Global market trends played a significant role, with positive signals from major Asian markets, including Japan’s Nikkei, Korea’s Kospi, and Hong Kong’s Hang Seng, which recorded gains of up to 3 per cent.
The boost in global confidence came after the United States administration temporarily halted proposed tariffs on Canada and Mexico, a move that was perceived as easing trade tensions.
Market experts believe that the US strategy on tariffs could follow a similar pattern with China. The approach of imposing tariffs and then negotiating trade agreements has been a key characteristic of the US trade policy under the current administration.
The pause in tariff implementation helped calm investor concerns, leading to a recovery in global equity markets, which had been affected by previous sell-offs.
In the domestic market, anticipation surrounding the upcoming Reserve Bank of India (RBI) Monetary Policy Committee (MPC) meeting also contributed to the rally. The meeting, scheduled from February 5 to February 7, has raised expectations of a possible rate cut by 25 basis points.
Analysts believe that economic growth and inflation data support the need for monetary easing. A potential reduction in interest rates could provide further liquidity to the market, boosting investor confidence.
Large-cap stocks also saw renewed buying interest as valuations appeared relatively attractive. The Nifty 50 had already declined by 11 per cent from its peak, creating opportunities for investors to enter at lower levels.
Some brokerage firms pointed out that while the price-to-earnings ratio of the Nifty 50 was slightly below its long-term average, certain metrics still indicated a possibility of further corrections in the market.
Technical factors also played a role in the market’s upward movement. Analysts highlighted key support levels for the Nifty 50, with 23,250 emerging as a critical level.
The index showed a bullish pattern on technical charts, suggesting potential for further gains. Some market analysts predicted that the index could move towards 24,050 in the short term, with support at 23,500 and 23,250.
Trading data also indicated strong open interest at higher levels, reflecting positive sentiment among traders. Resistance was seen near the 23,800 mark, while support remained firm at 23,200.
Market participants anticipated some volatility in the near term as the market approached its weekly expiry, but overall sentiment remained optimistic.
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