Nifty, Sensex jump 1

Nifty, Sensex jump 1.5%, Bank Nifty tops 42000 for 1st time; here’s what is fueling Friday’s market rally

Benchmark indices BSE Sensex and NSE Nifty 50 soared over 1.5% on Friday and Bank Nifty topped 42000 mark for the first time ever as bulls raged on Dalal Street, powered by a much-awaited ease in US retail inflation. Following a global market rally, the BSE Sensex surged 1,072 points to scale a new 52-week high of 61,685 points, while the NSE Nifty jumped 304 points to 18,332 (near its 52-week high of 18,351). Both frontline indices are now only around 1% away from reclaiming their all-time highs of 62245.43 and 18,604.45, respectively. “The overall structure of both Nifty & Sensex is bullish. So Investor has to invest in the market for riding the 19000+ levels in the near term,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart.

“It was well known that the crucial US inflation numbers for October will sway the market either up or down depending on the trajectory of inflation. Now that the inflation print has come below expectations, the direction of the markets is a foregone conclusion. Since the CPI and core print indicate moderation of inflation, it is probable that the Fed might pause after one more hike of 50 bps. The outlook is bullish for the near- term. A new record for the Nifty is only a question of when,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Here’s what is fuelling Friday’s market rally

Global markets surge: The S&P 500 and Nasdaq jumped on Thursday, racking up their biggest daily percentage gains in over 2 and a half years as a sign of slowing inflation in October sparked speculation the Federal Reserve might become less aggressive with interest rate hikes. The S&P 500 climbed 5.54%, the Nasdaq gained 7.35%, and Dow Jones Industrial Average rose 3.70%. In Asia, Hang Seng zoomed over 5%, followed by Kospi, Nikkei and Shanghai, which rose 1-3% each.

US Inflation: Price increases moderated in the United States in October in the latest sign that the inflation pressures that had gripped the nation might be easing as the economy slows and consumers turn more cautious. Retail inflation in the US rose by a less-than-expected 0.4% for October and 7.7% from a year ago, which was its lowest annual increase since January this year. Excluding volatile food and energy prices, core inflation rose 6.3 percent in the past 12 months and 0.3 percent from September. Investors turned bullish overnight following the release of the data as they expected inflation to have peaked out as this could prompt the US Fed to slow down rate hikes.

Retreat in US Dollar, Rupee appreciation: The dollar languished on Friday after the US inflation data came in cooler than expected, raising hopes that inflation may have peaked and that the US Fed will begin scaling back its aggressive interest rate hikes. The dollar tumbled overnight after the release, and recorded its worst day against the Japanese yen since 2016, having fallen 3.7%. It has since clawed back some of those losses and gained 0.53 percent last to 141.69 yen. Against a basket of currencies, the US dollar index slumped more than 2 percent overnight, the most in over a decade, to stand at 108.06. As dollar retreated, rupee surged 110 paise from its previous close, its biggest opening gain in nine years to 80.71 against the US dollar.

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Foreign flows: Turnaround in foreign investor sentiment after a disappointing month of September is also lending strength to domestic equity markets. According to the data, FPIs bought shares worth nearly Rs 8,430 crore in October against net selling of Rs 13,405 crore in September. For the first 10 days of November too, foreign investors have pumped Rs 546 crore into the market.