The Sensex had its best day in months, gaining more than 2,000 points as banks and financial stocks surged. Six sessions in, the autumn sell-off has almost been erased.
Dalal Street didn’t wait for Diwali.
The Sensex closed 2,008.61 points higher on Thursday at 79,310.01, a gain of 2.60%. The Nifty added 576 points, or 2.40%, to finish at 24,536.60, close to a three-month high. Investors were about ₹7 lakh crore richer by the close, Business Standard calculated.
This was the sixth straight day of gains, and the biggest of them.
Go back a week. Brent crude was flirting with $118. Foreign funds were dumping Indian shares. The Nifty was hovering near 23,000, and most market commentary was about how much further it could fall. Since then, the Sensex has climbed roughly 6,000 points, about 8%.
What did it
Banks, mostly. The Bank Nifty jumped 3.33%, the Nifty Financial Services index about 4%, and the capital market index, which tracks exchanges, brokers and fund houses, rose 4.24%.
The reason is oil. Brent is down to about $94 after the US midterm results raised hopes of an end to the Iran war. Cheaper oil means less inflation, which means the RBI is much less likely to raise rates again in December. For banks, that is good news on every front: better loan demand, fewer defaults, and gains on the government bonds they hold.
IT stocks, which had been the market’s laggards, joined in too, with the Nifty IT index up 2.42%. Breadth was solid: 2,868 shares rose on the BSE and 1,384 fell. The Midcap 100 gained 1.87%, though smallcaps cooled off, up just 0.56%.
Results added fuel. M&M rallied about 6.5% on its quarterly numbers, BSE gained around 6%, and LG Electronics India rose more than 4%.
Now the hard part
Rallies this fast tend to invite profit-taking, and the calendar makes that more likely. Friday is Dhanteras, Sunday is Diwali, and plenty of investors like to lock in gains before the holidays.
There’s also the small matter of what’s driving all this. The market is pricing in an Iran settlement that hasn’t happened. The Strait of Hormuz is still mostly shut. One bad headline from the Gulf and oil could be back above $100 before anyone has finished their Diwali sweets.
Friday will also bring the reaction to a big batch of after-hours results: Airtel, Titan, LIC, ONGC, Britannia and Berger Paints all reported on Thursday evening.
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