Indian shares rose for a fifth straight session, and this time smaller companies led. The Nifty Smallcap 100 gained 2%, three times as much as the Nifty, while IT was the only sector to fall.
The Sensex rose 383.55 points, or 0.50%, on Wednesday to close at 77,301.40. The Nifty 50 gained 149.75 points, or 0.63%, to 23,960.60, its highest close in about two months.
It was the fifth straight day of gains, the Nifty’s longest winning run since June, and the benchmarks are up more than 5% over those sessions.
The day was quieter than the previous two. The indices moved within a narrow range for much of the session and briefly slipped into the red around midday before closing higher. The bigger move was among smaller companies.
The rally broadens
The Nifty Smallcap 100 rose 2.00% and the Nifty Midcap 100 1.55%, well ahead of the Nifty’s 0.63%.
That is a clear change from Tuesday. Then, the Nifty rose 1.58% while the Smallcap index gained only 0.3%, because the rally was driven by foreign investors buying large, liquid companies. On Wednesday, buying spread to the rest of the market.
That matters because smallcaps have lagged for most of the autumn. In October, the Nifty Smallcap 250 fell about 5% while the Nifty 50 rose about 2%, as investors favoured large companies during the Gulf crisis. A broader rally suggests confidence is returning beyond the biggest stocks, typically when domestic investors start putting money to work alongside foreign buyers.
Defence and realty were among the strongest groups. Bharat Electronics was the top Nifty gainer, rising 4.71% to ₹398, after Motilal Oswal raised its target price following last week’s results and expressed confidence in the company’s order pipeline. Adani Enterprises rose 4.47%, Titan 4.22%, Jio Financial Services 3.73% and Max Healthcare 3.53%. Metal, media, FMCG and realty indices all outperformed.
IT drags again
IT was the only sector to decline. The Nifty IT index fell more than 1%, at one point dropping about 2% intraday. TCS fell more than 2% and HCLTech also declined. BSE Ltd, which rose 5% on Tuesday, was among the losers as investors took profits.
IT’s weakness, despite AMD’s strong overnight results in the US, reflects investors moving money out of a sector that rose about 11% over the previous three months and into sectors that had lagged, such as FMCG, realty and smallcaps.
Several factors supported the market. Crude oil eased further, US Treasury yields fell, and foreign investors continued buying after Tuesday’s large purchase. The US election result, with Democrats winning both houses of Congress, was seen as reducing the chance of renewed US strikes on Iran. The rupee strengthened to 94.58 a dollar.
After five days of gains and more than 5% added to the indices, the market is at a point where profit-taking is likely. The Nifty is close to the 24,000 mark, which is likely to attract selling. The key question is whether foreign investors keep buying once the effect of the US election fades, and whether oil continues to fall.
Thursday brings the weekly derivatives expiry and more results, and Dhanteras falls on Friday.
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