Sensex Surges 584 Points, Nifty Above 25,000: Key Factors Behind the Market Rebound

The Indian stock market witnessed a significant rebound on Tuesday after a five-day losing streak, with both the Sensex and Nifty closing on a strong note. The benchmark indices, after a flat opening, gained momentum as the session progressed, buoyed by a combination of favorable global cues and sectoral gains across various industries.

At the end of the trading day, the BSE Sensex rose by 584 points, marking a 0.7% increase, while the NSE Nifty climbed 217 points, or 0.9%, crossing the 25,000 mark. Some of the top gainers on the day included companies like Trent, M&M, and Adani Ports. However, on the losing side were Tata Steel, Titan, and JSW Steel, reflecting the mixed performance across sectors.

Mid and Small Cap Outperform: Sectoral Insights

The broader market saw impressive performances with the BSE MidCap index jumping by 1.8% and the BSE SmallCap index surging 2.5%, indicating strong buying interest across mid and small-cap stocks. Barring the metal sector, which was the sole laggard, most other sectoral indices witnessed gains, with the capital goods and power sectors leading the charge. Stocks in these sectors saw increased buying interest, underscoring the market's broad-based rally.

Among notable performers, Coforge, Trent, and IPCA Labs all hit their respective 52-week highs during the session, reflecting strong momentum in specific stocks. On the currency front, the rupee was trading at 83.96 against the US dollar, while gold prices on the MCX fell by 0.3% to Rs 75,849 per 10 grams, and silver prices dropped by 1.5% to Rs 90,969 per kilogram.

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What’s Driving the Market’s Momentum?

There are four critical factors behind the Indian stock market’s rise today:

1. Positive Global Cues

While most Asian markets remained subdued on Tuesday, Chinese stocks bucked the trend, surging after a week-long break. China's CSI300 blue-chip index rose 10% during early trade, its strongest performance since July 2022. This rally was driven by stimulus measures introduced by Beijing, which has boosted investor sentiment globally. The Shanghai Composite Index followed suit, rising to its highest levels since December 2021.

China's rebound provided much-needed relief to global markets, offering positive cues that supported the Indian stock market's rise.

2. PSU Stocks on the Rise

Public sector undertakings (PSUs) were among the standout performers in today’s session. Stocks in the railways and defense sectors, such as RVNL and HUDCO, surged by over 8% and 7%, respectively. Other top performers in the PSU space included PFC, REC, IRCON, HAL, BEL, Mazagon Dock, and Cochin Shipyard, all recording gains ranging between 4% and 6%.

This rally in PSU stocks was underpinned by expectations of continued policy support and a favorable outlook for government-linked enterprises. The strength in these sectors reflects investors’ confidence in PSUs, driven by expectations of robust government backing and reforms.

3. Broad Sectoral Gains

The market saw gains across several sectors, with the Media index leading the charge, up 2.9%. The Health and Pharma indices also posted strong gains, further contributing to the broad-based rally.

This sectoral momentum suggests that the rally was not confined to a few industries but was spread across the market, providing stability and confidence to investors. The strength of these indices indicates growing demand for health-related stocks and optimism around media and entertainment companies, possibly tied to the festive season and advertising uptick.

4. Decline in Oil Prices

Another key factor supporting the rally was the drop in oil prices. Brent crude futures, after surging above $80 a barrel for the first time in over a month, fell by 1.5% to $79.74 per barrel. U.S. crude futures also shed 1.54%, trading at $75.9 per barrel. Lower oil prices are typically favorable for India, a major oil importer, as it helps ease inflationary pressures and reduces the country’s import bill.

The decline in crude prices came as concerns about supply disruptions eased, providing a further tailwind to the Indian stock market.

Nifty PSE Index Advances – Key Gainers

The Nifty PSE Index rose by 2%, driven by strong performances from key public sector enterprises (PSEs) like Power Finance Corporation (PFC), REC, and Hindustan Aeronautics Limited (HAL). The index was buoyed by expectations of continued policy stability under the ruling Bharatiya Janata Party (BJP), which is poised to secure a historic third term in Haryana.

As of 2:20 pm on October 8, PFC had gained 5.2%, REC was up 4.38%, and HAL had climbed 4.64%. Other major gainers included Bharat Electronics Limited (BEL), with 14 of the 20 stocks in the Nifty PSE index trading in the green.

On the flip side, stocks like NMDC, Hindustan Petroleum Corporation, and Power Grid Corporation saw declines, with losses of up to 4.5%.

Engineering Sector in Focus: HEG’s Stock Surge

In the engineering sector, shares of HEG Limited rose sharply, gaining over 6% on October 8. The surge followed the company’s acquisition of an 8.2% stake in industry rival GrafTech International for Rs 2.5 billion. GrafTech, listed on the New York Stock Exchange, is a leading producer of graphite electrodes and operates several large-scale manufacturing facilities globally. This strategic acquisition positions HEG as a key player in the global graphite electrode market.

Additionally, the heavy trading volumes reflected strong investor interest, with around four lakh shares traded, doubling the daily average of the previous week.

Earlier in May, HEG had announced a demerger of its graphite business to unlock value for shareholders. Following the demerger, the company plans to shift its focus to green energy ventures such as hydro and wind energy, advanced carbon solutions, and other emerging sectors. The graphite business is set to be listed in 2025, with the demerger process involving a 1:1 share swap ratio.

In conclusion, The Indian stock market’s rally today was driven by a confluence of factors, including positive global cues, robust performances from PSU stocks, broad-based sectoral gains, and a decline in oil prices. While the metal sector lagged behind, the overall momentum suggests a favorable outlook for the market in the near term, with investors looking forward to policy continuity and further global economic recovery.