The Indian stock market witnessed a strong rally today, with the Sensex jumping by 550 points and the Nifty 50 climbing above 22,200. Several factors contributed to this upward movement, providing a much-needed boost after a series of weak trading sessions. Here are the top five reasons why the Indian stock market is rising today:
1. Short Covering
The market’s rally is partly driven by short covering. After 19 consecutive sessions of weak trading, investors, particularly foreign institutional investors (FIIs), had accumulated significant short positions. With today’s rise, many of these investors are covering their positions, leading to a relief rally.
2. US Dollar Hits Three-Month Low
The US dollar has fallen to its lowest level since December 2024, which has prompted FIIs to cover their short positions in Indian stocks. The decline in the dollar index, which is nearing the 105.50 mark, has made Indian equities more attractive, contributing to the positive momentum.
3. Dip in US Bond Yields
US Treasury yields had been rising, but recent selling has brought them down. This dip, along with the profit-booking in the US currency market, has encouraged FIIs to shift their focus back to Indian stocks, further supporting the rally.
4. Renewed Fear of US Inflation
The renewed concern over rising US inflation, particularly after US President Donald Trump’s speech in Congress, has fueled market volatility. This has made investors wary, with expectations that the Federal Reserve may take a more hawkish stance, impacting global markets, including India.
5. Evaporating Fear of Trump’s Tariffs
The market’s initial fear of the potential impact of Trump’s tariff policies seems to be fading. While the US stock market has been priced high, there’s growing anticipation that tariff increases could push the US into a correction, which would temper Trump’s influence on global markets, including India.
Stock Market Outlook
For the Indian market to sustain this upward momentum, the Nifty 50 needs to decisively move above the 22,500 level, and the Bank Nifty should rise past the 49,200 zone. The Sensex has immediate support at 73,000, with crucial support at 72,000. If the index closes above 74,500, the market may establish positive conviction in the coming sessions.
