The Indian stock market experienced significant momentum on December 3, 2024, as benchmark indices Sensex and Nifty 50 continued their three-day winning streak, reflecting increased investor confidence amid positive domestic and global cues.
Closing firmly in the green, the Sensex surged by 597.67 points, marking its final position at 80,845.75, equivalent to a 0.74% increase. The Nifty 50 also made noteworthy gains, rising by 181.10 points to finish at 24,457.15. This positive outcome was driven by heavy purchasing activity, particularly within the PSU Bank and media sectors.
Vikram Kasat, Head of Advisory at PL Capital, noted, "Indian benchmark equity indices edged higher on Tuesday, extending their winning streak to a third consecutive session, as positive cues from Asian markets lifted investor sentiment." His insights highlight the importance of the favorable trading environment observed across the broader Asian market.
Among the notable achievements of the day, Adani Ports emerged as the top gainer within the Sensex, appreciating by 6.02% to close at Rs 1,288.80. This recovery was particularly significant following the turmoil the Adani Group faced due to allegations of bribery and fraud brought forth by US authorities just weeks earlier.
The market's uplift seemed to be influenced by several factors, including expectations surrounding the US Federal Reserve's upcoming monetary policy decision, where analysts anticipate the central bank might implement a 25 basis-point rate cut. The speculation is rooted in remarks made by influential officials from the Fed, which are shaping investor sentiment globally.
Rupak De, Senior Technical Analyst at LKP Securities, remarked on the positive trend for the Nifty, stating: "Nifty witnessed another day of bullishness as the index moved above the 38.20% Fibonacci retracement level of the previous decline." This technical perspective emphasizes the considerable buying pressure pushing the index beyond previous resistance levels.
On sectoral performance, nearly all key segments contributed positively, with the Nifty PSU Bank, media, metal, energy, and infrastructure sectors closing higher. Conversely, the Nifty Pharma and FMCG sectors faced downward pressure, indicating mixed performance among specific industries.
While the upward trend was encouraging, foreign investment patterns presented some challenges. Recent data revealed foreign institutional investors had withdrawn Rs 21,612 crore from Indian equities during November. After liquidations of around Rs 94,017 crore in October, these continued outflows caused concern among market observers. Fortunately, the rate of outflows showed signs of slowing recently, hinting at potential stabilization.
Daily trading results showed 25 of the 30 Sensex constituents ending positively, as investors appeared to regain confidence. A total of 2,740 stocks advanced on the BSE, far outpacing the 1,219 decliners, reflecting strong market breadth.
The broader market indices also registered notable gains, with the Nifty Midcap 100 climbing by 508.15 points, or 0.89%, and the Nifty SmallCap 100 up by 132.15 points, or 0.83%. This rally across various market segments demonstrates the heightened appetite for equities as sentiment shifted positively.
Investor enthusiasm can also be linked to broader trends observed across major Asian markets, which closed higher, and European markets maintaining strong performance. This global backdrop formed the perfect support structure for local trading actions.
Market analysts also pointed out, as investors gear up for the RBI's monetary policy announcement later this week, sentiments reflect optimism for potential policy easing, which may spur economic activity. With inflationary pressures continuing and economic growth expectations uncertain, such measures could propel the market even higher.
Among the major gainers, prominent heavyweights included NTPC, Axis Bank, State Bank of India, and Larsen & Toubro, all of which contributed to the positive traction observed throughout the trading day. Meanwhile, top laggards included Bharti Airtel, ITC, Sun Pharma, Asian Paints, and Kotak Mahindra Bank, indicating sector-specific challenges even amid broader market strength.
The activity seen on the stock market over the past few days paints a nuanced picture—while confidence is palpable, attention remains toward upcoming economic indicators and global market developments. Investors appear cautiously optimistic, eager to gauge how these elements will shape this rally's sustainability as the week progresses.
Another contributing factor setting this rally apart was the recent decline in crude oil prices, which relieved some concerns about inflation. Lower oil prices tend to benefit various sectors, particularly transport and manufacturing, by reducing operational costs and improving profit margins.
Despite the overall positive outlook driven by bullish investor sentiment, it remains to be seen whether these gains can be sustained. The nuances of global economic indicators, fiscal policies, and local economic performance will play pivotal roles. Investors are likely to stay vigilant as they navigate this complex but promising economic environment.
Analysts will closely watch how the market reacts to potential shifts at the Reserve Bank of India's meeting, with expectations building for policy adjustments aimed at stimulating growth. The prevailing mood leans toward optimism, as indices continue to chart positive trajectories after recovering from last week’s dips.
Overall, the continued winning streak of the Indian market highlights resilience amid challenges and reflects investor sentiment influenced by local dynamics and global economic conditions. The forthcoming days promise to be interesting as market participants digest fresh economic data and navigate the upcoming monetary policy decisions.
