Indian stocks extended a strong run on Tuesday, 3 November. The BSE Sensex rose 1,225.07 points, or 1.6 percent, to close at 76,917.85, and the NSE Nifty 50 gained 370.05 points, also 1.6 percent, to finish at 23,810.85, its highest close in two months. It was the fourth straight session of gains, following Monday's rises of 1,233.25 points for the Sensex, which closed at 75,692.78, and 387.70 points for the Nifty, which closed at 23,440.80. Together the benchmarks have gained nearly 5 percent over four sessions. FMCG stocks were the top sectoral gainers. Reliance Industries was named as a key contributor to the advance.
The argument that the rally has solid backing comes from oil and earnings. Brent crude fell below 110 dollars a barrel from about 116 dollars the week before, easing pressure on a country that imports most of its oil. Jefferies says 56 percent of the 105 companies it covers beat expectations this quarter, and more than half of the changes to earnings estimates were upgrades. The brokerage raised its FY27 earnings growth estimate for the MSCI India index by one percentage point, to 15 percent. Nifty IT rose 14.8 percent in October, on course for its strongest monthly gain since July 2020, as investors rotated away from AI-linked stocks toward Indian IT services companies, and foreign investors turned buyers. The buying was broad enough to lift FMCG, the top sectoral gainer, as well as IT, and the Nifty's two-month high shows that the recovery has now lasted more than a single session, which gives the argument for the rally its strongest support.
The argument that the rally is fragile starts with the same oil market. Crude could rise again, and the article that reported the gains lists Middle East tensions and weak global markets as risks that remain. Some companies reported cost pressures, and several heavyweight companies have yet to announce results, so the earnings picture is incomplete. Foreign buying is a change of direction and not yet a trend, since no net figure was reported for the day. Finance Minister Nirmala Sitharaman has acknowledged anxiety among retail investors, and markets are also watching for a possible review of long-term capital gains tax for foreign investors, a decision that could reverse the mood quickly if it goes the wrong way. Technical analysts cited in the same report put support for the Nifty at 22,650, a level the index would test if the gains reverse.
The market matters because share prices reflect how investors expect the economy and company profits to behave, and because foreign flows influence the rupee and the cost of raising money for Indian companies. A 15 percent earnings growth forecast, if it holds, would support further gains. A reversal in crude or foreign selling would do the opposite and would add to the anxiety Sitharaman has already acknowledged among retail investors.
Tuesday's close was a strong day in a strong week, and the numbers behind it are real. The coming earnings reports and the movement of oil will decide whether this is a recovery or a short rebound. =====
Leave a Reply