Sensex Surges 700 Points: 3 Key Reasons Behind the Share Market Rally
Share Market Rise: 3 Key Reasons Behind the Market Rally as Sensex Jumps 700 Points After 3-Day Fall
Following three back to back fall in the Indian stock market, there has been a strong rebound on July 29. The markets registered a severe recovery in the last trading hour. The BSE Sensex surged up to almost 700 points in the second half of the day to recover a large part of the losses seen earlier and even the Nifty 50 again failed to breach the psychological level of 24,800. The best gainers in the market included Jio Financial Services, Larsen and Toubro (L&T), Asian Paint Company, Bharti Airtel and Apollo Hospitals which gained up to 4%.
By the end of the trading session:
- The BSE Sensex closed 446.93 points higher, up by 0.55%, at 81,337.95.
- The Nifty 50 rose 140 points, or 0.57%, to settle at 24,821.10.
Here are the three main reasons behind today’s market rally:
1. Strong Value Buying
Investors came to realize that they can afford to buy good stocks at cheap prices after recording a downtrend in three consecutive sessions. This led to the purchase of value in various industries particularly in IT, metal and real estate. Nifty Realty Index rose by almost 2 percentage points as it ends a five-day streak of ending the day in red. On similar pattern the Nifty Auto Index gained about 1% also indicating revival of interest in the auto segment.
2. Drop in Market Volatility
The India VIX that gauges volatility and fear of investors in the market fell by 2.9% to 11.71. When the volatility index decreases, the condition of investors is normally calm, and not fearful. This better mood will influence more people to take risks and hence the increase in the market.
3. Positive Global Cues
Good cues in overseas markets also added up to the Indian investor mood. The Asian markets, such as the SSE Composite Index in China and the KOSPI in South Korea were in the green. Further, the developments of the Wall Street were also on the positive side showing a good start of the US market which further enhanced optimism in the Indian market.
What Do Experts Say?
As per Anand James, Chief Market Strategist at Geojit Financial Services, certain sections of the market appear to have reached the vicinity of fear. He explained that:
- 65% of the Nifty 500 shares ended in a range of 1% of the daily trough.
- At the end of the day, 30 percent of the stocks were below two standard deviations indicating that the pressure of sales could be leveling off.
James further said that the 24,922 level continues to be major resistance of Nifty but the levels 24,750 to 24,650 are considered as supporting levels because it has occurred so many times. In case the market remains above 24,000-24,450 there is a likelihood of the market reversal upwards.
Conversely, 24,788 will still be an important level in the short term, whereas 24,922-25,050 may still work as resistance range.
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Conclusion
Today’s market rally brought much-needed relief to investors after three days of selling. The combined effect of value buying, lower volatility, and strong global cues gave a fresh boost to the Indian stock market. While resistance levels remain, experts believe that if key support levels hold, the market could continue its upward journey in the coming days.
