Sensex jumps 500 points: 3 reasons why stock market is rising today

Dalal Street started the week on a strong note on Monday as benchmark indices moved higher in early trade. The Sensex jumped nearly 500 points, while the Nifty also saw a sharp rise, supported by buying interest across sectors.

The S&P BSE Sensex was trading 491.04 points higher at 84,071.44, while the NSE Nifty50 gained 168.40 points to trade at 25,862.10. The rise came after a mix of positive global cues, strong buying by foreign investors, and sharp gains in PSU banking stocks.

RETURN OF FIIs BOOST MARKET

One of the main reasons behind the rise in the stock market today is the return of foreign institutional investors, or FIIs, to Indian equities. After several sessions of mixed activity, FIIs turned net buyers in the cash market, which helped lift both the Sensex and the Nifty.

Data from the exchanges shows that FIIs were net buyers worth Rs 1,950.77 crore on February 6. This buying came after selling seen on February 5, when FIIs sold shares worth Rs 2,150.51 crore.

Earlier in the week, FIIs were also active buyers. On February 3, foreign investors bought shares worth Rs 5,236.28 crore. On February 4, they remained almost neutral with a small net buying of Rs 29.79 crore.

For the month till date, FIIs have bought shares worth Rs 93,250.26 crore and sold shares worth Rs 90,604.73 crore, leading to a net purchase of Rs 2,645.53 crore. This steady return of foreign money has improved market confidence and supported the rise in benchmark indices.

INDIA-US TRADE DEAL SUPPORT MARKETS

Another key factor supporting the market today is improving investor sentiment after more details of the India-US trade deal started coming out. Investors are seeing the agreement as broadly supportive for Indian companies, especially those linked to exports.

Brokerage firm Bernstein said that the information released so far is broadly positive for Indian equities. It said auto component companies could see gains, while the pharmaceutical sector may get protection from possible downside risks.

Bernstein also pointed out that the removal of the additional 25% Russian oil-related duty is expected to help Indian exports. The brokerage said the economic cost of shifting to distant crude suppliers would be balanced by tariff benefits.

Despite recent market ups and downs, Bernstein has kept its year-end Nifty target unchanged. This suggests a possible upside of around 9.5% from current levels. However, the brokerage also said risks remain as the agreement is still a framework and not a full bilateral trade agreement.

JM Financial also called the India-US trade agreement a positive for market sentiment, especially for export-focused sectors. At the same time, it warned that high valuations could slow fresh foreign inflows.

The brokerage added that lower effective tariffs and removal of extra duties should help improve India’s trade balance with the US, which had weakened earlier in the financial year due to higher tariffs.

Better export flows are expected to support dollar inflows, strengthen the balance of payments, and provide mild support to the rupee. JM Financial said India’s external position now looks better compared to several Asian emerging markets that are still facing higher US tariffs.

PSU BANKING STOCKS JUMP ON BACK OF SBI Q3 RESULTS

PSU banking shares were among the top gainers in today’s session, adding strength to the broader market.

State Bank of India (SBI) led the rally in the PSU banking space. The shares of SBI jumped nearly 7% to a fresh record high on February 9 after the bank reported strong December quarter results that beat market expectations.

The stock touched a new 52-week high of Rs 1,137 per share during morning trade. SBI reported a 24% rise in net profit for the December quarter. The bank also outperformed private sector peers such as ICICI Bank and HDFC Bank in loan growth. It further raised its guidance for the next financial year, which added to investor confidence.

Several brokerages raised their target prices for SBI following the results, supporting the sharp rise in the stock.

In morning trade, the Nifty PSU Bank Index was up 3.52%. SBI was the top gainer, rising 6.70%. Indian Bank gained 3.48%, while Bank of India rose 3.32%. Central Bank of India was up 2.38% and UCO Bank added 2.24%.

Punjab and Sind Bank climbed 2.18%, Union Bank of India rose 1.53%, and Canara Bank gained 1.52%. Punjab National Bank was higher by 1.42%, Bank of Baroda rose 1.37%, and Bank of Maharashtra added 1.08%. Indian Overseas Bank was also trading in the green, up 1.64%.

Overall, strong FII buying, positive cues from the India-US trade agreement, and sharp gains in PSU banking stocks combined to push the market higher in early trade today.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)