 "Sensex jumps 1070 pts, Nifty hits 23,600: Reasons behind market rally today")
Share market rally: Extending their winning ways into sixth straight day, the BSE Sensex and the NSE Nifty50 were trading higher on Monday. The broad-based rally in the stock markets today was led by banking and realty stocks. The BSE Sensex jumped 1078.87 points or 1.4 per cent to settle at 77,984.38, while the NSE Nifty 50 gained 307.95 points or 1.32 per cent to settle at 23,658.35. In the broader markets, the Nifty MidCap index was up 1.32 per cent, and the Nifty SmallCap index added 1.17 per cent on the National Stock Exchange (NSE).
Notably, the BSE Sensex surged 4.16 per cent and Nifty50 gained 4.25 per cent last week, logging theit biggest 1-week rally in four years. Analysts believe the improving macros of the Indian economy, fair valuations of the stock markets, and foreign institutional investors (FIIs) turning net buyers are the key reasons behind the reversal of trend in the Indian market.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, for instance, says the markets is seeing a massive short covering, which is leading to sharp spikes in prices. That said, even though the undertone of the market is bullish, Vijayakumar advises investors to be careful ahead of US President Donald Trump's reciprocal tariff deadline on April 2, 2025.
Ambareesh Baliga, independent market analyst, too said the bounce back in the markets seems to be over and could see the Nifty rise another 200-300 points from here. "However, I believe the markets may not react well to the uncertainties around April 2nd, or as that date approaches. Therefore, we may experience a correction towards the end of this week," he added.
Meanwhile, on the bourses, banking stocks-led the rally with the NSE PSU Banks index surging up to 3.18 per cent. In addition, the Nifty Realty index jumped 1.53 per cent, and the Nifty Oil & Gas index surged nearly 1.46 per cent.
Here are the three key reasons why stock markets are rising today, March 24, 2025:
Fair Valuations: The Indian stock market has been on a downward trajectory since October 2024. The BSE Sensex and the Nifty50 indices have slumped nearly 14 per cent from their record peaks, while the broader MidCap, and SmallCap gauges have tanked over 20 per cent.
The rout, however, has removed the valuation froth in the Indian stock markets. The Nifty50's price-to-earnings (P/E ratio) is down to 18.8x compared to its peak of 23.8x seen in September 2024. For the Nifty MidCap and SmallCap indices, the P/E multiple has eased from 42x and 28x to 30x and 23x, respectively.
FPIs coming back: Foreign portfolio investors (FPIs) inflows stood at ₹7,470.36 crore on Friday, largely on the back of FTSE March Review. FPIs bought equities worth ₹3,239 crore on Thursday, March 20, lifting hopes of a possible turnaround in FPIs' sentiment towards Indian stock market. In the current financial year of 2024-25 (FY25), foreign investors lapped up domestic stocks in just three of the first six months of H1FY25. Since then, that is since October 2024, they have sold Indian shares every month amid stretched valuations and mounting growth slowdown woes. In total, FPIs have sold India shares worth ₹1.5 trillion in FY25, the biggest annual sell-off for a financial year on record. READ MORE
Stable Indian Rupee: The Indian rupee jumped 12 paise to 85.85 against the US dollar on Monday, backed by strong domestic inflows. Despite the global uncertainties, the weakening dollar provided an additional boost to the investor sentiment. A stronger Rupee makes investment in Indian shares attractive for foreign investors, supporting their comeback to Indian markets.