A strong run meets a cautious morning
India’s stock market has had a good November, and Wednesday made it better. The benchmark Sensex climbed 772.75 points, or 0.95%, to close at 81,879.40. The Nifty 50 gained 210.40 points, or 0.84%, to finish at 25,255.05, its highest close in almost nine months.
Thursday started more cautiously. The Nifty opened about 41 points below Wednesday’s close and dipped to 25,142.95 in early deals before recovering. By around 9:40 am in Mumbai, the Sensex was up roughly 330 points at about 82,210, while the Nifty was near 25,350. Indicators ahead of the open had pointed to a flat start. Asian markets were fragile after Nvidia’s shares tumbled in after-hours trading in the United States.
What powered Wednesday’s gains
Three forces did most of the work. The first was Wall Street. US technology shares rebounded on Wednesday after strong results from AI cloud company CoreWeave, which lifted sentiment toward chipmakers and growth stocks worldwide.
The second was oil. Crude prices have been easing, which matters to India because the country imports most of its fuel. Lower oil tends to ease pressure on inflation, the rupee and corporate costs. Market commentary on Thursday pointed to the sustained moderation in crude as a support for benchmark indices.
The third was domestic breadth. On Wednesday, 2,756 shares rose on the exchange against 1,555 that fell. The Nifty Smallcap index jumped 1.6% and the Midcap index added 0.8%. Public-sector banks led the advance, and reports attributed part of the strength to buying by foreign institutional investors.
Banks in the driver’s seat
Financials were again at the front of the queue on Thursday. Among private lenders, ICICI Bank rose about 1% to Rs 1,587.70 in early trade and Axis Bank gained a similar amount to Rs 1,350.60. IndusInd Bank climbed 1.58% to Rs 914.25, while Kotak Mahindra Bank added 0.79% to Rs 491.55.
Smaller banks did even better. Tamilnad Mercantile Bank jumped 3.68%, Karnataka Bank rose 3.25% and Bandhan Bank gained about 3%. Among state-run lenders, Bank of Maharashtra rose 1.84% and UCO Bank 1.73%, while Punjab National Bank edged up 0.37% to Rs 138.99.
Banks matter to the market’s mood because they make up a large share of the Nifty. When lenders rally, benchmark indices tend to follow, and investors read it as a sign of confidence in credit growth and the wider economy.
The Nvidia shadow
The overnight news from the United States was less welcome. Nvidia’s shares fell about 8% in after-hours trading after reports that the company’s board is preparing to remove chief executive Jensen Huang. The reports rattled futures tied to the Nasdaq-100 and pulled Asian markets lower in morning trade.
For Indian investors, the direct exposure to Nvidia is limited. The indirect effect is bigger. India’s large information technology companies earn much of their revenue from US clients, and a wobble in the AI trade can change expectations for technology spending. It can also shift the flow of global money between emerging markets and US assets.
Reasons for caution
Analysts also see technical grounds for care. One market outlook noted that the Nifty is trading in overbought territory, which raises the possibility of a mild pullback toward the 25,000 to 24,800 range. After a strong run, even small disappointments can trigger profit-taking.
Global monetary policy is another factor. Hotter-than-expected US inflation data this week pushed bond yields sharply higher and convinced traders that the Federal Reserve will raise rates in December. Higher US yields can pull money out of emerging markets, putting pressure on the rupee and on Indian shares.
What to watch next
Traders will be looking at a few things in the sessions ahead:
- Foreign investor flows. Sustained buying would support the rally, while a reversal could quickly change the tone.
- Crude oil. A rebound in prices would remove one of the market’s key supports.
- Nvidia’s next move. A board decision on Mr Huang, and the company’s earnings on November 17, will set the mood for technology stocks worldwide.
For now, Dalal Street is enjoying its best stretch in months. The question is whether banks, cheaper oil and steady domestic buying can carry it through a week full of global uncertainty.
