Sensex rises over 500 points, Nifty nears 12,200; 5 factors that are boosting the sentiment

Bulls regained control on the Street on January 9 with the Sensex climbing over 41,000 level and Nifty near its psychological 12,200 level. The rally was across sectors, barring IT, – Nifty Bank, Auto, and Realty indices rose around 2 percent each.

The BSE Sensex surged 542.05 points, or 1.33 percent, to 41,359.79 and the Nifty50 jumped 159.40 points, or 1.33 percent, to 12,184.80.

The broader market also participated in the rally. The Nifty Midcap index was up 1.4 percent and Smallcap index gained 1.9 percent amid strong breadth.

Nearly four shares advanced for every share falling on the National Stock Exchange.

The national address by US President Donald Trump with respect to escalating tensions with Iran indicated that both countries may want to avoid crisis. The Trump’s address came hours after Iranian forces fired missiles on US troops housing in Iraqi facilities.

The attack was in retaliation to the American killing of Iranian major general Qassem Soleimani.

While addressing nation, Trump said, “Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world.”

“Iran must abandon its nuclear ambitions and end its support for terrorism. The time has come for the United Kingdom, Greece, France, Russia and China to recognise this reality. They must now break away from the remnants of the Iran deal, or JCPOA. And we must all work together towards making a deal with Iran that makes the world a safer and more peaceful place,” he added.

He said, “As we continue to evaluate options in response to Iranian aggression, the United States will immediately impose additional punishing economic sanctions on the Iranian regime. These powerful sanctions will remain until Iran changes its behaviour.” (With inputs from Reuters)

Asian markets recouped previous day’s losses after easing geopolitical tensions between United States and Iran as both sides backed away from the brink of further conflict in the Middle East.

Iran offered no immediate signal it would retaliate further over killing of its senior military commanders, reports Reuters.

Japan’s Nikkei gained 2.3 percent while Hong Kong’s Hang Seng and South Korea’s Kospi were up 1.3 percent each. China’s Shanghai Composite rose 0.6 percent at the time of publishing this copy.

The cooling off of oil prices after ebbing US-Iran tensions also lifted Indian market sentiment as it is a big relief to the country, which imports more than 85 percent of its oil requirement.

International benchmark Brent crude futures fell 4.1 percent amid volatility in the previous session and traded around $65 a barrel (compared to $68-70 levels seen on January 8) amid a rocket attack on Baghdad which triggered fresh worries over likely conflict in the Middle East.

The spectacular rally could also be attributed to pre-budget expectations as the government is readying a set of bold initiatives that will likely be announced in the Budget for 2020-21 which could bring a quick turnaround in the Indian economy.

Top sources in the government said that over the last few days the Prime Minister has been brainstorming over a range of issues affecting the economy and thrash out appropriate policy interventions.

He has held as many as 12 meetings so far with groups of industrialists and experts. Each group has had between 10-12 people each and each meeting has been for three hours and more, in what probably is the most extensive ever consultations that Modi has held on matters related to the Union Budget and the economy in the past five years.

Each ministry has been asked to prepare a five-year vision and the Prime Minister is personally reviewing each plan, going through detailed presentations, sources said.

The Nifty50 saw a strong gap-opening and started trading near day’s high, forming a bullish candle on daily charts.

Experts feel 12,200 may continue to be a strong resistance in near term and if it crosses that decisively then it could move to record high levels touched last week.

“As of now, the index could trade within the range of 11,900-12,200 and a breakout beyond the same will lead to a directional move,” Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking said.

“However, stock-specific momentum still continues in the broader market and hence, traders should be more focused on picking stocks which could provide better trading opportunities in near term,” he added.

According to him, 11,900-12,000 range is likely to act as a support.

Nifty Bank also showed strong strength as it saw more than 350 points gap-up opening and crossed psychological 32,000 level intraday, forming large bullish candle on daily charts.