The first trading session of the week prompted a wave of anxiety amongst investors. However, brushing aside early volatility, both the BSE Sensex and the Nifty 50 staged a strong recovery on Monday. After the initial hour of fluctuations, the indices gained steadily through the day.
As a result, the combined market capitalisation of BSE-listed companies surged by nearly ₹3 lakh crore in a single session.
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Sensex and Nifty close sharply higher
On Monday, Nifty 50 rose 211 points or 0.83 per cent, while the Sensex gained 650 points or 0.78 per cent. Following the rally, Nifty closed at 25,862 points and Sensex settled at 83,277 points.
Mid-cap stocks also participated in the rally, with the BSE 150 Mid Cap Index rising 0.64 per cent. However, the small-cap index slipped 0.16 per cent.
Among sectoral indices, most ended in positive territory. In the Nifty pack, all sectoral indices closed higher except auto, media and capital market. Nifty Bank advanced 1.27 per cent during the session.
Short covering boosts market momentum
Experts attribute Monday’s sharp rise partly to short covering after the recent correction. Investors showed increased buying interest in high-quality stocks. Heavyweights such as HDFC Bank, Reliance Industries, Axis Bank and Bharti Airtel led the rally and supported the indices.
Banking stocks lead the rally
Strong buying in banking shares significantly lifted the Nifty Bank index. Both the public sector and private banks witnessed gains. Steady credit growth and stable asset quality have strengthened investor confidence in the sector.
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The relative stability of the Indian rupee against the US dollar also played a role in sustaining foreign investor confidence. Dollar sales by exporters and steady foreign investment inflows provided support to the domestic currency.
Another key factor behind the rally was softer-than-expected US inflation data. The easing inflation has raised hopes that the US Federal Reserve may consider interest rate cuts. This improved global market sentiment, which in turn supported gains in the Indian stock market.
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