On Monday morning trades, major benchmark indices surged by about 2% thanks to strong global momentum. The Nifty50 gained 284 points to 16,636, while the S&P BSE Sensex benchmark rose nearly 950 points to 55,863. As investors on Dalal Street followed Friday's spike in US stocks in anticipation of an impending inflation high, the value of Indian stocks increased by Rs 4.4 lakh crore.
Analysts claim that domestic markets were motivated to speculate about a likely pause in interest rate hikes later this year after further monetary action in June and July by China's relaxation of COvid regulations and the US Fed's minutes from the early May meeting released on Wednesday. The market is poised for a short-term rally, according to Geojit Financial Services' chief investment strategist, VK Vijayakumar. Late last week, the Nasdaq and S&P 500 had a sudden upsurge that suggests a short-term trend reversal.
Here are factors fueling the stock market rally today-
"Indian markets surged for the third straight session on May 30 after good global cues due to China reducing COvid curbs and sharp Friday gains on wall street," said Deepak Jasani, head of retail research at HDFC Securities. The early arrival of the monsoon in Kerala, which raises prospects of a favorable impact on Agri crops, is one local element boosting the mood. Stocks had been constantly underperforming since early April 2022, so a rebound was already overdue. The Nifty's 16800–16850 level may be difficult to break shortly.
1) US Markets Rally
As a result of statistics showing that U.S. consumer spending increased in April and the increase in inflation slowed, the world's largest economy may be on pace to expand this quarter, US stocks had a widespread rise on Friday, and the yield on benchmark US Treasuries decreased. The S&P 500 increased by 100.4 points, or 2.47 percent, to 4,158.24, while the Dow Jones Industrial Average increased by 575.77 points, or 1.76 percent, to 33,212.96. The Nasdaq Composite increased by 390.48 points, or 3.33 percent, to 12,131.13.
2) Asian Equities Remain Higher
After China loosened COVID limitations in Shanghai and Beijing and provided a variety of economic support measures, Asian stocks gained higher. After officials declared that the Covid outbreak is under control, Shanghai will relax its requirements for individuals entering public spaces, while Beijing will relax mobility curbs in several areas starting on Sunday. Nikkei increased by 2%, Hang Seng by 1%, CSI 300 by 5%, and Taiwan and Kospi by 1.7 and 1.4 percent, respectively.
3) China Relaxes Covid Curbs
Asian stocks rose as a result of China relaxing COVID limitations in Shanghai and Beijing and providing a wide range of economic support measures. After officials declared that the Covid outbreak is under control on Sunday, Shanghai will relax its requirement that everyone entering public spaces undergo a Covid test, while Beijing will relax its mobility restrictions in several districts. Nikkei increased by 2%, Hang Seng increased by 1.9%, CSI 300 increased by 0.5%, Taiwan increased by 1.7%, and Kospi increased by 1.4%.
4) Buying in Heavyweights
Five stocks—the two HDFCs, the two largest IT companies, Infosys and TCS, and Reliance Industries—alone raised Sensex by more than 550 points. IT equities, which get a large portion of their revenue from exports, are rising thanks to bargain hunting and the recent decline in the value of the rupee.
5) India's GDP
Investors are also anticipating the May 31 publication of GDP figures for the March quarter. For the quarter, analysts have predicted growth ranging from 2.7 to 4.5 percent. The State Bank of India anticipates quarterly growth of 2.7%.
6) Monsoons Arrive Early
Three days earlier than usual, on June 1, the southwest monsoon arrived over Kerala on Sunday, according to the India Meteorological Department (IMD). According to economists, this is good news for India, which is struggling with skyrocketing inflation. For crops seeded during the monsoon season, such as rice, soybeans, and pulses, etc., timely and normal rains can increase yield.
The 16400 walls, which have rejected at least three audacious upward attempts in the last 30 days, are still standing fast, but it will soon face one of the greatest difficulties because the event risks for the next two weeks include a potential positive surprise. When compared to S&P500's turn upward off the 62.5% fibo, bouncing over 7.0%, and with greater opportunity for upside before meaning reversion difficulties appear, the claim that Nifty's bounce is off simply the 23.0% fibo of the 2020 rally loses its voice. This motivates us to continue the 16,750 moves we started last week. even though the default strategy would be to anticipate trade rejections at 16,415. The 16,084 downside risk threshold from last Friday will be raised to the 16186/51region. There is no question that Nifty is about to make a huge move. As a measure of the range and the side that Nifty would be coming out of, downsides have a 1,400 point potential, as opposed to 700 point potential for upsides, being at the top extreme of a month-old parallel consolidation range. However, the upcoming week will favor those who are willing to take chances.