Sensex climbs over 700 points: Key factors driving the market

NEW DELHI: All segments and sectors of the market saw buying on Thursday as investors celebrated the strong possibility of Joseph Biden becoming the President of the United States.

As clarity emerged in the US, volatility indicator, India VIX plunged sharply in the morning trade, indicative of the fact that investors are more or less sure about the direction of the market. Analysts, however, still preach caution.

Factors driving markets

• US elections: Joseph Biden is most likely to be the next President in the US. Investors increasingly expect the Republican and Democratic parties to retain their respective control of the Senate and the House of Representatives, dimming the prospect of higher taxes and financial regulation even under a Biden win.
• US Fed meet: The Federal Open Market Committee’s (FOMC) is scheduled to come out with its policy decisions, most likely reaffirming their commitment to support the pandemic-struck economy and keep interest rates unchanged.
• Services sector comes alive after 8 months: Activity in India’s dominant services industry, expanded for the first time in eight months in October as demand surged, but pandemic-hit firms continued to cut jobs, a private survey showed on Wednesday. The Nikkei/IHS Markit Services PMI climbed to 54.1 in October from September’s 49.8. It was the highest reading since February and comfortably above the 50-mark separating growth from contraction.
• BoE ramps up stimulus: The Bank of England increased its already huge bond-buying stimulus by a bigger-than-expected 150 billion pounds ($195 billion) as it sought to cushion Britain’s struggling economy against the hit from a second coronavirus lockdown. The BoE, also wary of the risk of a Brexit shock in less than two months’ time, raised the size of its asset purchase programme to 895 billion pounds ($1.16 trillion), 50 billion pounds more than expected by most economists in  ..

How are bluechips doing
After a gap up opening, benchmark indices maintained their gains as the day progressed. At 11.27 am, BSE flagship Sensex was up 727.84 points to 41,343.98. NSE benchmark Nifty followed and rose 191.25 points to 12,099.

“We have opened with a bang which is way above the resistance levels of 11,950 on Nifty. As mentioned yesterday, any dip can be used to accumulate long positions on the index. The markets should now be headed to 12,300-12,400,” Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.

In the 50-share pack Nifty, SBI that came out with Street-beating Q2 numbers was the biggest gainer, up 5.58 per cent. HCL Tech, Grasim Industries, BPCL, UPL, Nestle India, Asian Paints, Tech Mahindra and Infosys NSE 0.85 % were among other gainers.

Hero Moto was the only loser in the pack, down 0.81 per cent.

Broader markets
Broader market indices also saw buying in-line with their headline peers in morning trade as Nifty Smallcap rose 1.21 per cent while Nifty Midcap added 0.77 per cent. Broadest index on NSE, Nifty 500 was up 1.14 per cent.

Edelweiss Financial Services, ICICI Security, Jubilant Foodworks, Firstsource Solutions, Sonata Software and Alok Industries were among major gainers from the space while Lux Industries, Lemon Tree Hotels, DCM shriram, Godrej Properties, Navin Fluorine and Godrej Agrovet were under selling pressure.

Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.3 per cent to reach its highest since February, 2018. Japan’s Nikkei rose 1.1 per cent to a nine-month top and South Korea put on 1.5 per cent.

Chinese blue chips gained 0.8 per cent, aided by talk a Biden White House might ease back on trade war tariffs. E-Mini futures for the S&P 500 edged up 0.1 per cent, after sharp gains overnight, while EUROSTOXX 50 futures eased 0.3 per cent.

Technology and healthcare stocks duly led the charge higher overnight while those leveraged to consumer demand lagged. With tech stocks accounting for such a large share of the indices, the S&P 500 gained 2.20 per cent and the Nasdaq 3.85 per cent.

What to expect

• US elections: Investors will still keep tracking the newsfeed on US elections as the outcome is likely to be taken to the court by Trump.
• FOMC meet: US Fed is likely to deliver its decision on monetary policy later in the day, which will be eyed by investors across the globe.
• Q2 earnings: Berger Paints, Aditya Birla Capital, Adani Power, Adani Transmission, Bajaj Electricals NSE 4.64 %, Godrej Consumer Products NSE 1.75 %, Gujarat Gas NSE 1.67 %, Matrimony.com and Trent will release their earnings report.