Just before Diwali, the stock market has gifted investors with its meteoric rise. Investors' wealth increased by ₹7.47 lakh crore in just one hour. Let's understand the reason behind this.
Stock Market Rally: Market gave Diwali gift
Before Diwali, the stock market has given investors a gift few expected. As soon as the market opened on Thursday, the Sensex and Nifty made a significant jump. This surge increased the wealth of investors by nearly ₹7 lakh crore within just one hour. The Sensex jumped more than 1,400 points, while the Nifty surpassed 24,350.
There are several major reasons behind this market rally. The results of the US midterm elections have changed the global market sentiment. Meanwhile, a sharp drop in crude oil prices and buying by foreign investors have also supported the Indian market.
How much wealth increased in one hour?
At market opening on Thursday, the total market cap of companies listed on the BSE was approximately ₹4,93,44,359 crore. However, within an hour of trading, it increased to ₹5,00,91,168 crore. This means the market value increased by approximately ₹7.47 lakh crore during this period.
At around 10:15 am, the Sensex had risen more than 1,400 points to 78,735.79. Meanwhile, the Nifty 50 gained about 431 points and was trading at 24,389.55. The market saw gains for the sixth consecutive trading session.
Crude oil provided the biggest support.
The biggest reason for this rally in the stock market was the decline in crude oil prices. In the previous trading session, Brent crude prices fell by approximately 8.7 percent to around $94 per barrel. Meanwhile, US WTI crude also fell to around $88 per barrel.
India meets a large portion of its crude oil needs by purchasing it from other countries. Therefore, when oil prices rise, the country's import bill increases. This impacts the rupee, inflation, and corporate costs. On the other hand, lower crude oil prices can provide relief to the government and companies. This is why the market has taken the fall in oil prices as a positive sign.
What did the US election results bring?
The results of the US midterm elections also brought positive signs for the Indian market. The Democratic Party gained control of both houses of Congress. This is expected to shift the political balance regarding President Donald Trump's policies.
Investors believe that major tariff and trade decisions will no longer be as easy for the Trump administration. Furthermore, hopes of a de-escalation between the US and Iran have also increased. If tensions in West Asia ease, concerns about crude oil supplies may ease. Following the US election results, the US stock market also saw a sharp rise, reflecting its impact on Asian markets as well as the Indian market.
The Indian stock market
received a significant boost from the return of foreign investors. According to media reports, foreign investors purchased shares worth ₹7,284 crore on Wednesday, marking their largest single-day purchase since October.
Foreign investors have been buying Indian stocks for four consecutive trading sessions. Their purchases so far in November have exceeded ₹17,000 crore. Previously, in September and October, foreign investors withdrew approximately ₹90,000 crore from the Indian market.
