The Sensex rose more than 1,200 points for a second straight day and has gained about 3,700 points in four sessions, nearly 5%. Foreign investors appear to be buying again, consumer stocks led the gains, and the market showed little concern before tonight’s US election results.
The Sensex rose 1,225.07 points, or 1.62%, on Tuesday to close at 76,917.85. The Nifty 50 gained 370.05 points, or 1.58%, to 23,810.85. It was the fourth straight day of gains for both.
Since last Wednesday’s close of 73,246, the Sensex has risen about 3,670 points, close to 5%, in four sessions. That is one of the sharpest short-term rallies this year, coming just days after the market was near its 52-week low.
Consumer stocks lead
Monday’s rally was driven by Reliance and oil companies. Tuesday’s was led by FMCG, realty, autos and private banks. BSE Ltd was the top Nifty gainer, followed by Tata Consumer, Asian Paints, Bharti Airtel and Nestle India. Ten of 13 sector indices rose.
FMCG’s rise follows a week of strong consumer company results. HUL’s volume growth was its best in more than four years, Marico grew volumes 10%, and ITC’s cigarette business is recovering from the June quarter. Lower oil helps too, since it eases packaging and transport costs.
Asian Paints’ gain stands out, given its weak volume growth last week. The likely reason is cheaper crude: paint relies on oil-derived raw materials, so every fall in Brent improves its margin outlook.
The rally was concentrated in large companies. The Nifty Midcap rose about 1% and the Smallcap only 0.3%.
Foreign investors returning
Market commentary pointed to signs that foreign portfolio investors are returning to Indian shares. After a record outflow of more than ₹3 lakh crore this year, any shift to buying matters for the market.
Several factors may be bringing them back. Indian valuations have fallen after a 14% decline this year. The global AI selloff has made investors reconsider markets with little AI exposure. Oil is easing. And recent results have generally been better than expected.
Speculation about a possible change to long-term capital gains tax was also mentioned as a factor. There has been no official announcement.
The risk tonight
The rally has a clear risk. Americans are voting in the midterm elections today, and results will come in overnight, India time. Markets have rallied on the assumption that Washington will continue talks with Iran after the vote. If the administration moves instead towards new strikes, oil could rise quickly and much of these four days’ gains could reverse.
After a near 5% rise in four sessions, the market is also vulnerable to profit-taking, regardless of the election.
Additionally, BLS Polymers listed at a 65% premium. SBI reported a 14% rise in profit, but its shares fell. NSE reported a 23% profit increase.
The rest of the week brings US election results tonight and Wednesday, Coal India’s dividend record date on Wednesday, the weekly derivatives expiry on Thursday, and Dhanteras on Friday.
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