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The Indian stock market witnessed a significant surge on Tuesday, March 18, 2025, with the Sensex soaring by 900 points and the Nifty trading above 22,750. This impressive rally, which followed Monday's positive momentum, was fueled by a confluence of factors, ranging from positive global cues and domestic tailwinds to technical resilience and bargain buying. Financial and metal stocks led the charge, with all sectors participating in the upward trend, painting a picture of broad-based optimism in the Indian equity market. The surge in market capitalization further underscored the robust investor sentiment, adding a substantial Rs 4.03 lakh crore to the value of BSE-listed companies, bringing the total market capitalization to a staggering Rs 397.20 lakh crore. This significant increase in wealth reflects the growing confidence in the Indian economy and the attractiveness of Indian equities as an investment destination. The market's performance was not solely attributable to domestic factors; global developments played a crucial role in shaping investor sentiment. Investors were closely monitoring key policy decisions from major central banks, including the US Federal Reserve, the Bank of Japan, and the Bank of England, all of which were expected to maintain a steady course on interest rates. This expectation of stable monetary policy provided a degree of certainty and stability, encouraging investors to allocate capital to riskier assets like stocks. The positive cues from global markets were particularly evident in the performance of Asian markets. Hong Kong's Hang Seng Index, for instance, surged by 2% on Tuesday, reaching a three-year high, driven by increasing investor optimism regarding China's economic outlook. Positive economic data and policy measures implemented by the Chinese government to stimulate consumption further bolstered market sentiment. The Hang Seng Index's remarkable year-to-date gain of 23% made it the best-performing major market globally, signaling a potential turnaround in China's economic fortunes. The positive momentum in Asian markets extended beyond Hong Kong, with Chinese mainland stocks also experiencing modest gains. MSCI's broad index of Asia-Pacific shares rose by 1%, indicating a widespread improvement in investor sentiment across the region. Markets in Seoul, Sydney, and Taipei also advanced, reflecting the positive spillover effects of China's economic recovery and the overall improvement in global economic conditions. Japan's Nikkei rebounded by 1.5%, marking its largest daily gain in three weeks, further demonstrating the positive sentiment permeating Asian markets. The boost from China's stimulus measures was a significant driver of the market rally. The Chinese government's proactive efforts to stimulate domestic demand, including the introduction of childcare subsidies and a "special action plan" to support consumption, signaled a commitment to reviving household spending and bolstering economic growth. The release of retail sales data on Monday, which showed an acceleration in growth in China, provided further evidence that these measures were having a positive impact, offering much-needed relief to policymakers striving to revive household spending. The positive economic data from the United States also contributed to the upbeat market sentiment. Investor sentiment received a boost after US retail sales rebounded in February, rising by 0.2% following a sharp 0.9% decline in January. This rebound suggested that the US economy remained resilient, despite concerns about potential economic slowdowns. The weakening of the U.S. dollar also played a role in the market's positive performance. The U.S. dollar hovered near a five-month low against the euro and other major currencies, as measured by the dollar index, which had dropped nearly 6% from its two-year high of 110.17 in mid-January, standing at 103.44. This weakening of the dollar made emerging market assets more attractive to foreign investors, leading to increased capital inflows into markets like India. The Indian rupee opened slightly higher at 86.7625 per USD on Tuesday, benefiting from the dollar’s weakness. In addition to global cues and economic data, bargain buying also contributed to the market rally. The Indian market continued its recovery from Monday, with investors seizing attractive valuations in beaten-down stocks. Technical indicators suggested that the market had been oversold, making the rebound a natural course of action. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the importance of positive domestic cues, such as GDP growth and a rise in gross tax collection, as favorable macro trends supporting the market. The geopolitical landscape also played a role in shaping market sentiment. U.S. President Donald Trump’s potential discussions with Russian President Vladimir Putin regarding a ceasefire proposal for the Russia-Ukraine conflict helped support riskier assets. A resolution to the conflict could ease global energy prices and stabilize broader markets, reducing uncertainty and boosting investor confidence.
Technical analysis also provided a positive outlook for the market. Shrikant Chouhan, Head of Equity Research at Kotak Securities, highlighted a positive trend in Nifty based on the daily chart, with a bullish candle formation and a higher bottom pattern. He stated that as long as Nifty stays above 22,350 and Sensex above 73,800, bullish momentum is likely to continue. However, despite the strong domestic signals and positive global cues, challenges remain that could hinder a sustained move higher. Dr. Vijayakumar noted that while domestic tailwinds are positive, global headwinds, particularly from tariff wars, could limit the market’s upward potential. The ongoing trade tensions between major economies continue to pose a threat to global economic growth and could potentially dampen investor sentiment. Furthermore, foreign institutional investors (FIIs) are increasingly focused on China, leading to FII selling in emerging markets like India, where valuations remain high. This shift in FII focus could put downward pressure on Indian equities, offsetting some of the positive effects of domestic and global factors. In conclusion, the Indian stock market's impressive rally on March 18, 2025, was driven by a complex interplay of factors, including positive global cues, domestic tailwinds, technical resilience, and bargain buying. While the market's near-term outlook appears positive, challenges remain that could potentially limit its upward potential. Investors should remain cautious and closely monitor global economic developments, geopolitical events, and FII activity to make informed investment decisions.
To delve deeper into the reasons for the market's upswing, a closer examination of each contributing factor is warranted. First, the positive global cues played a crucial role. The strong performance of Wall Street and Asian markets instilled confidence among Indian investors, encouraging them to participate in the rally. The surge in Hong Kong's Hang Seng Index, driven by optimism over China's economic outlook, served as a significant catalyst. This positive sentiment was further amplified by positive economic data and policy measures aimed at stimulating consumption in China. The fact that the Hang Seng Index had gained 23% year-to-date, making it the best-performing major market globally, underscored the potential for a turnaround in China's economic fortunes. The rise in MSCI's broad index of Asia-Pacific shares also indicated a widespread improvement in investor sentiment across the region, further contributing to the positive global cues. Second, China's stimulus measures provided a significant boost to the market. The Chinese government's proactive efforts to stimulate domestic demand, including the introduction of childcare subsidies and a "special action plan" to support consumption, signaled a commitment to reviving household spending and bolstering economic growth. The release of retail sales data on Monday, which showed an acceleration in growth in China, provided further evidence that these measures were having a positive impact. This positive economic data from China reassured investors and encouraged them to invest in emerging markets like India. Third, the positive economic data from the United States also contributed to the upbeat market sentiment. The rebound in US retail sales in February, following a sharp decline in January, suggested that the US economy remained resilient. This positive economic data from the US reassured investors and reduced concerns about a potential economic slowdown. Fourth, the weakening of the U.S. dollar made emerging market assets more attractive to foreign investors. The U.S. dollar hovered near a five-month low against the euro and other major currencies, making investments in emerging markets relatively cheaper and more attractive. This led to increased capital inflows into markets like India, further boosting the market's performance. Fifth, bargain buying also contributed to the market rally. After a period of consolidation, investors seized attractive valuations in beaten-down stocks. Technical indicators suggested that the market had been oversold, making the rebound a natural course of action. This bargain buying helped to drive up the prices of undervalued stocks, contributing to the overall market rally. Sixth, geopolitical developments also influenced sentiment. U.S. President Donald Trump’s potential discussions with Russian President Vladimir Putin regarding a ceasefire proposal for the Russia-Ukraine conflict helped to support riskier assets. A resolution to the conflict could ease global energy prices and stabilize broader markets, reducing uncertainty and boosting investor confidence. Finally, technical analysis provided a positive outlook for the market. Shrikant Chouhan, Head of Equity Research at Kotak Securities, highlighted a positive trend in Nifty based on the daily chart, with a bullish candle formation and a higher bottom pattern. This technical analysis suggested that the market was likely to continue its upward momentum.
Source: Why Market Is Rising Today? Know Key Factors Behind Sensex Soaring 900 Points