Led by strong performances from heavyweight stocks like Reliance Industries (RIL) and Oil and Natural Gas Corporation (ONGC), Indian stock markets experienced a significant rally on Monday, buoyed by global cues and upbeat sentiment surrounding the upcoming interim Budget.
The BSE Sensex surged by 1,241 points to close at 71,941.57, while the NSE Nifty Index soared 385 points to reach 21,737.60, marking a 1.8 percent increase in both indices.
RIL shares particularly stood out, spiking by 6.86 percent to Rs 2,896.15, reaching a 52-week high of Rs 2,905 and pushing its market capitalization beyond the Rs 19 lakh crore mark to Rs 19.59 lakh crore. Similarly, ONGC witnessed an impressive surge of 8 percent during the trading session.
Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial, attributed the positive sentiment to several factors, including stimulus announcements from China, optimism surrounding the Union Budget, and expectations of an interest rate cut in the upcoming US Federal Reserve meeting.
Analysts noted that investor optimism is particularly high ahead of the interim Budget on February 1, with expectations of significant allocations in key sectors such as infrastructure and energy.
"This optimism is not unfounded, as government spending in these areas typically signals robust growth prospects, thereby attracting investor interest," stated an analyst" Additionally, specific sectors such as defence and railways are experiencing a surge, likely due to expectations of targeted fiscal stimulus.
This sector-specific rally is a strong contributor to the overall index performance, as these sectors form a substantial part of the Nifty 50."
Domestic institutions were observed as net buyers, accumulating stocks worth over Rs 3,000 crore during the trading session. Vinod Nair, Head of Research at Geojit Financial Services, highlighted the recent selloff and positive cues from Asian peers as contributing factors to the market upturn, adding that despite premium valuations, confidence remains high among investors due to the optimistic environment surrounding the interim Budget and recent corporate results aligning with forecasts.
Globally, investors are closely monitoring the upcoming US Federal Reserve policy meeting, considering it a crucial factor. While a rate cut by the Fed is deemed unlikely, market participants are eagerly awaiting their commentary for insights into future rate paths.
Overall, the day's rally highlighted the resilience of Indian markets amidst global uncertainties, with investors expressing confidence in the domestic economic outlook, driven by expectations of favorable policies and growth prospects in key sectors.
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