Benchmark indices Sensex and Nifty extended gains for a second consecutive session on Friday. Continued strength in IT stocks, which rose for a fourth straight session, along with buying in auto, metal and PSU banking stocks, supported the rally.
On Friday, Sensex rose over 400 points, or 0.56%, to close at 74,730, while the Nifty gained nearly 150 points to end the session above the 23,100 level. From the day's low, the Sensex had recovered more than 700 points to reach 74,775, during the session. The rebound follows a 1,500-point rally on Wednesday.
Among Sensex constituents, Tech Mahindra, Infosys, TCS, Bharti Airtel, Mahindra & Mahindra and HCL Technologies led the gains, rising as much as 9%. On the other hand, IndiGo, Reliance Industries, Asian Paints, BEL, declined up to 2.3%.
Why is the stock market rallying today?
1) IT stocks extend gains for a fourth session
IT stocks, including TCS, Tech Mahindra, Infosys and HCL Technologies, rose as much as 8% on Friday, lifting the sectoral index by more than 3% and pushing its weekly gains into double digits. The rally follows stronger earnings and a selloff in AI-linked stocks.
VK Vijayakumar, chief investment strategist at Geojit Investments, said strong results from major IT companies and positive management commentary had triggered a sharp recovery in the IT index, helping the Nifty remain resilient. He added that the improvement could provide fundamental support to the broader market.
Another positive development is the sharp decline in the US10-year bond yield to 5.07%. Falling US bond yields can support Indian equities by making emerging markets such as India more attractive to foreign investors. When yields on US Treasury bonds decline, the appeal of relatively riskier assets, including Indian stocks, can improve, potentially encouraging foreign portfolio investors (FPIs) to increase their exposure to Indian markets.
Despite simmering tensions and attacks on energy infrastructure, Brent crude prices dipped half a percent amid chances of US easing restrictions on the world's so-called shadow fleet of tankers to temper liquid gold prices.
The shadow fleet is a group of oil tankers used to transport oil from countries facing sanctions, particularly Russia, Iran and Venezuela, often outside the conventional Western shipping, insurance and regulatory system.
According to a Reuters report, the Trump administration is considering lifting sanctions on some so-called shadow fleet vessels that have transported oil and petroleum products from countries including Russia, Iran and Venezuela. The move is aimed at bringing down global freight rates, which have reached record highs.
Experts, however, say FII selling could likely persist as long as yields remain above 5% and oil above $100 per barrel.
4) Rupee gains for 5 day
The rupee rose 2% this week to record its strongest weekly gain in seven months, supported by policy measures aimed at stabilising the currency. However, analysts cautioned that a sustained recovery would depend on easing the underlying pressures on the rupee.
The currency closed at Rs 94.96 per US dollar, up 0.1% on the day, recovering after last week’s slide brought it close to its record low of Rs 96.96 per dollar.
Experts said that the rupee is strengthening as offshore traders reduce bearish bets and the RBI continues to sell dollars, supported by curbs on hedging activity and the special dollar window for oil companies. “The near-term bias for USD/INR remains cautiously bearish, with a sustained move back above 94.90–95 needed to stabilise the pair. A decisive break below 94.40–94.50 could open the way toward 94.08,” Ponmudi R, CEO of Enrich Money, said.
Geojit Investments says “While we continue to maintain our 23,200-23,600 view, it is fair to expect mean reversion moves while below 23,070, given yesterday’s sharp rise. However, dips are expected to find buying interest as long as they don’t stretch beyond 22,780.”
The broader market remained mixed with the midcap index slipping marginally, while the smallcap index ended marginally higher.
