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After falling for the 10 days consecutively, the BSE Sensex and NSE Nifty surged on Wednesday amid positive global cues and increased buying in midcaps and smallcaps.
One of the major reasons for the market rally today was the indication from US Commerce Secretary Howard Lutnick on the possible relief on tariffs. (AI-generated image)
After 10 consecutive days of decline, the domestic equity markets showed signs of strength on Wednesday with the benchmark indices surging by over 1 per cent. The BSE Sensex surged by 740.30 points to settle at 73,730.23, while the NSE Nifty jumped 254.65 points to close above the 22,300 level at 22,337.30.
Adani Ports, Tata Steel, PowerGrid, Mahindra & Mahindra, and NTPC were the top gainers surging by up to 5.02 per cent on the Sensex on Wednesday, March 5.
Why Did Market Rise Today?
US Indicates Relief On Tariffs: One of the major reasons for the market rally today was the indication from US Commerce Secretary Howard Lutnick on the possible relief on tariffs. He added that the US could announce a pathway for reducing tariffs on Mexican and Canadian goods under the North American free trade agreement (NAFTA) as early as Wednesday.
Increased Buying In Midcaps & Smallcaps: In India, smallcaps and midcaps are witnessing an increased buying from investors. On Wednesday, though the Sensex was up by over 1 per cent during intra-day, the smallcap and midcap indices ended the day higher by 2.80 per cent and 2.66 per cent, respectively. Even yesterday, Tuesday (March 2), the smallcaps and midcaps closed higher despite benchmark indices ending the day in red.
Asian Market Strength: Strength in the Asian markets, including Hang Seng, led to a positive trend in the domestic equity market on Wednesday. Hong Kong’s Hang Seng Index jumped nearly 2 per cent amid China’s plans to stimulate the economy, including issuing $179 billion worth of special treasury bonds this year. Japan’s Nikkei also traded higher.
Value Buying Due To Oversold Markets: As the markets had fallen below its major support level of 22,000 on Tuesday, it presented a buying opportunity for investors, thus boosting markets. “The recent sell-off breached multiple support levels, but oversold conditions in the market presented buying opportunities, setting the stage for a potential short-term rebound,” Rajesh Bhosale, analyst at Angel One, told Reuters.
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“The pullback was driven by several factors, including strength in Asian markets, bargain buying in oversold stocks, and value buying in blue-chip stocks. All 13 major sectoral indices closed in the green, with metals, information technology, and automobile stocks leading the rally. The BSE Midcap and BSE Smallcap indices surged by 2.66 per cent and 2.8 per cent, respectively,” Bajaj Broking Research added.
On Monday, brokerage firm Axis Securities in its report said the “market is nearing a medium-term bottom” and advised investors to allocate some long-term money between the Nifty levels of 21,700 and 22,000.
“While a clear bullish trigger is yet to emerge, historical patterns, technical indicators, and sectoral valuations suggest that the market is nearing a medium-term bottom. Therefore, we would advise investors to allocate some long-term money between 21700-22000,” Axis Securities said in its latest report, titled ‘India Equities Exclusive’.
The benchmark Nifty 50 has now lost nearly 16 per cent from its September record peak of 26,277. That’s the sixth biggest drop from an important swing high since the Great Recession lows of 2008-09, and the second largest decline since the Covid-led crash seen in March 2020. With February ending in the red, the decline is now five months old, matching a streak that was last seen in November 1996.