Indian market rallied for the third consecutive day in a row on March 3 pushing benchmark indices beyond crucial resistance levels. The S&P BSE Sensex was back above 51,000 while the Nifty50 has reclaimed 15,200 levels.
Strong global cues, vaccine news promising quick recovery across the globe, strong micro & macro data, and fall in the dollar index due to stability in US Treasury Yields lifted the sentiment on the Street.
On the final tally, the Nifty50 jumped 326.50 points or 2.19 percent to 15,245.60 and the BSE Sensex was up 1,147.76 points or 2.28 percent at 51,444.65.
“Benchmark US government bond yields dipped again for the third consecutive day as investors paused a recent sell-off ahead of a slew of US economic data that will be released later this week,” said a Reuters report. The yield on 10-year Treasury notes stood at 1.4086%, down from last week’s high of 1.614%.
Sectorally, the action was seen in metals, banks, finance, IT, and realty stocks.
We have collated a list of the top 5 factors that might be powering the rally on D-Street:
Strong micro & macro data:
India’s gross domestic product (GDP) in the third quarter of FY21 rose marginally at 0.4 percent, reaffirming that the economy is back on track thanks to the stimulus packages by the government last year.
A stable PMI data for February and strong GST collections for the month of February highlighted green shoots in the economy. The goods and services tax (GST) collection crossed the Rs 1 lakh crore mark for the fifth month in a row in February.
“Equity bulls in India are likely to take a cue from this positive global backdrop. Adding to the global positivity, there are many domestic positive economic news like Rs 1.3 lakh crore GST collections in Feb, Rs 77,000 crore from the first day of spectrum auction, declining crude prices, and reasonably good news from auto sales in Feb. In brief, advantage bulls!,” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.
Government receives bids worth Rs 77,164 crore:
On the first day of spectrum auction, the government received bids worth Rs 77,146 crores as against its expectation of Rs 45,000 crore, said Union communications minister Ravi Shankar Prasad on March 1.
“Total value of spectrum put to auction was Rs 4 lakh crore approximately, so against close to Rs 4 lakh crore, we have received biddings worth Rs 77,146 crore,” Prasad said.
He said the bidding took place for spectrum in 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz bands, while there were no bidders in the 700MHz and 2500MHz bands on day one.
Most of the Asian markets were trading with a positive bias as investors shrugged off concerns of a rise in US Bond Yields last month, and focused more on the upcoming US Stimulus, said a Reuters report.
Hong Kong’s Hang Seng was up 2.7 percent, Japan’s Nikkei gained 0.51 percent, Australia’s ASX 200 climbed 0.82 percent and South Korea’s Kospi rose 1.29 percent, while China’s Shanghai Composite gained 1.95 percent.
Big beats and upgrades from the 3QFY21 earnings season:
The 3QFY21 corporate earnings season revved up from 2Q, with big beats and upgrades reported across most brokerage house coverage universe.
MOSL Universe and Nifty posted earnings growth of 31% and 22%, vs. expectations of 17% and 7%, respectively. The underlying recovery has led to the broad-basing of growth.
The performance, while broad-based, was led by cyclical sectors such as Metals, Autos, and Cement. About 57% of companies in MOFSL’s coverage universe beat estimates, while 24% reported below than expected earnings.
“This resulted in the second consecutive quarter of material upgrades for Nifty EPS (5%/3% upward revision in Nifty FY21/22 EPS),” said the report.
Metal index lead gains:
Metal stocks continued to remain in focus as the dollar slipped. On a year-to-date basis, the S&P BSE Metal index is up over 25 percent.
Stocks that are leading the rally include names like Tata Steel, NALCO, JSPL, JSW Steel, and Hindalco Industries.
CapitalVia Global Research Ltd is of the view that many countries are heading towards privatization and infrastructural development to revive from the push of pandemic effects, this will increase the demand of base metals in general.
“The demand will increase for commercial as well as residential purposes, this is however a long-term prediction for the demand of industrial metals,” the report added.
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