The Indian stock market had a notable upswing on February 4, with the Nifty 50 breaking 23,500 in morning trading and the Sensex rising more than 700 points. The BSE Midcap and Smallcap indices increased by 1%, reflecting the gains in mid- and small-cap companies.
Today's stock market: On Tuesday, February 4, the Indian stock market jumped in morning trading as the Nifty 50 recovered 23,500 points and the benchmark Sensex rose more than 700 points due to broad-based purchasing. The BSE Midcap and Smallcap indices increased by more than 1% apiece, reflecting the robust advances in the mid- and small-cap segments.After closing at 77,186.74, the Sensex began at 77,687.60 and surged more than 700 points to reach 77,952. In contrast to its closing price of 23,361.05, the Nifty 50 began at 23,509.90 and surged over 1% to 23,582.
At approximately 9:50 AM, the Nifty 50 was up 203 points, or 0.87 percent, at 23,563.80, while the Sensex was up 715 points, or 0.93 percent, at 77,902.25.
At that moment, the BSE Smallcap index was trading 1.10 percent higher while the BSE Midcap index was up 1.38 percent.
Investors gained almost ₹4.5 billion in value as the total market capitalization (m-cap) of the BSE-listed companies increased to almost ₹424 lakh crore from ₹419.5 lakh crore in the previous session.
Why is the stock market in India growing right now?
Experts identified the following five reasons for the Indian stock market's growth:
1. Positive inputs from around the world improve mood
Investor confidence increased as a result of the positive sentiment that permeated the domestic market. Following abrupt shifts in US trade policy, major Asian indices, such as the Nikkei of Japan, the Kospi of Korea, and the Hang Seng of Hong Kong, all saw increases of more than 1%.
2. Trump halts tariffs on Canada and Mexico
One of the main factors influencing the mood of the world stock market lately has been US President Donald Trump's tariff plans. The proposed tariffs on Canada and Mexico have reportedly been halted by the Trump administration, which seems to have improved market mood.
"There are encouraging signs today following yesterday's worldwide sell-off in equities markets. President Trump's strategy, which consists of imposing tariffs first, then negotiating and reaching an agreement, is evident in his decision to temporarily freeze the tariffs on Mexico and Canada and begin negotiations, according to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"China is probably going to try the same tactic as well. It's critical to realize that the United States will also suffer from a full-scale trade war," Vijayakumar stated.
3. RBI MPC: A 25 basis point rate decrease is anticipated
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will meet on February 5–7. It is highly anticipated that the central bank will lower benchmark rates by 25 basis points to begin its rate reduction cycle.
Data on inflation and growth both point to the need to loosen monetary policy, according to Rahul Bajoria, an Indian and ASEAN economist with BofAS India.
In the February MPC, Bajoria anticipates that the RBI will lower the repo rate by 25 basis points, to 6.25 percent. In order to provide long-term liquidity, it may also think about lowering the CRR by another 50 basis points or making sizable bond purchases through open market operations.
4. Some comfort with valuation in large-cap stocks
The Nifty 50 has dropped 11% from its top, which provides some reprieve in terms of values and increases the appeal of certain large-cap equities. It appears that this has led investors to place bets on stocks that are cheaply valued.
Some important measures, however, are still stretched, suggesting that more adjustments may be necessary.
The 12-month forward price-to-earnings (PE) ratio for the Nifty 50 is 19.9 times, according to brokerage firm Motilal Oswal Financial Services. At a 3% discount, this is less than its long-period average (LPA) of 20.6 times. According to Motilal Oswal, the Nifty 50's 12-month trailing PE, at 22.6 times, is close to its LPA of 22.7 times, at a 1% discount.
In contrast, the index's price-to-book value (PB) is 3.1 times, which is 11% higher than its historical average of 2.8 times. According to the brokerage business, the Nifty's 12-month trailing PB ratio is 3.5 times, which is 13% higher than its historical average of 3.1 times.
5. Technical factor: a crucial support of 23,200
The previous session saw the Nifty 50 close at 23,361. According to experts, the index has a crucial support level at 23,200.
The Nifty 50 closed above the crucial 21EMA on the daily chart, but sentiment seems brittle and support might be broken soon, according to Rupak De, Senior Technical Analyst at LKP Securities.
"On the lower end, support is placed at 23,200 and 23,100, while on the higher end, resistance is placed at 23,400," De said.
The hourly average and the previous day's low coincide at 23,200 levels, which analysts at brokerage firm Reliance Securities noted would be crucial to maintaining the present momentum. The average for the last 50 days is resistance at 23,800 levels.
We anticipate considerable volatility in today's trade with regard to the move and weekly expiry of the Sensex, as the RSI and other important technical indicators are now mixed. According to Reliance Securities, the biggest call open interest (OI) has increased to 23,800 strikes, while the largest put on the downside is at 23,000 for the weekly expiry.
Experts identified the following five reasons for the Indian stock market's growth:
1. Positive inputs from around the world improve mood
Investor confidence increased as a result of the positive sentiment that permeated the domestic market. Following abrupt shifts in US trade policy, major Asian indices, such as the Nikkei of Japan, the Kospi of Korea, and the Hang Seng of Hong Kong, all saw increases of more than 1%.
2. Trump halts tariffs on Canada and Mexico
One of the main factors influencing the mood of the world stock market lately has been US President Donald Trump's tariff plans. The proposed tariffs on Canada and Mexico have reportedly been halted by the Trump administration, which seems to have improved market mood.
"There are encouraging signs today following yesterday's worldwide sell-off in equities markets. President Trump's strategy, which consists of imposing tariffs first, then negotiating and reaching an agreement, is evident in his decision to temporarily freeze the tariffs on Mexico and Canada and begin negotiations, according to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"China is probably going to try the same tactic as well. It's critical to realize that the United States will also suffer from a full-scale trade war," Vijayakumar stated.
3. RBI MPC: A 25 basis point rate decrease is anticipated
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will meet on February 5–7. It is highly anticipated that the central bank will lower benchmark rates by 25 basis points to begin its rate reduction cycle.
Data on inflation and growth both point to the need to loosen monetary policy, according to Rahul Bajoria, an Indian and ASEAN economist with BofAS India.
In the February MPC, Bajoria anticipates that the RBI will lower the repo rate by 25 basis points, to 6.25 percent. In order to provide long-term liquidity, it may also think about lowering the CRR by another 50 basis points or making sizable bond purchases through open market operations.
4. Some comfort with valuation in large-cap stocks
The Nifty 50 has dropped 11% from its top, which provides some reprieve in terms of values and increases the appeal of certain large-cap equities. It appears that this has led investors to place bets on stocks that are cheaply valued.
Some important measures, however, are still stretched, suggesting that more adjustments may be necessary.
The 12-month forward price-to-earnings (PE) ratio for the Nifty 50 is 19.9 times, according to brokerage firm Motilal Oswal Financial Services. At a 3% discount, this is less than its long-period average (LPA) of 20.6 times. According to Motilal Oswal, the Nifty 50's 12-month trailing PE, at 22.6 times, is close to its LPA of 22.7 times, at a 1% discount.
In contrast, the index's price-to-book value (PB) is 3.1 times, which is 11% higher than its historical average of 2.8 times. According to the brokerage business, the Nifty's 12-month trailing PB ratio is 3.5 times, which is 13% higher than its historical average of 3.1 times.
5. Technical factor: a crucial support of 23,200
The previous session saw the Nifty 50 close at 23,361. According to experts, the index has a crucial support level at 23,200.
The Nifty 50 closed above the crucial 21EMA on the daily chart, but sentiment seems brittle and support might be broken soon, according to Rupak De, Senior Technical Analyst at LKP Securities.
"On the lower end, support is placed at 23,200 and 23,100, while on the higher end, resistance is placed at 23,400," De said.
The hourly average and the previous day's low coincide at 23,200 levels, which analysts at brokerage firm Reliance Securities noted would be crucial to maintaining the present momentum. The average for the last 50 days is resistance at 23,800 levels.
We anticipate considerable volatility in today's trade with regard to the move and weekly expiry of the Sensex, as the RSI and other important technical indicators are now mixed. According to Reliance Securities, the biggest call open interest (OI) has increased to 23,800 strikes, while the largest put on the downside is at 23,000 for the weekly expiry.
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