Stock market today: Sensex, Nifty 50 gain nearly 1% at open: 5 key reasons behind the market rally

Estimated read time 15 min read

Broader markets supported the rally, with the Nifty Midcap 100 and the Nifty Smallcap 100 indices also trading in the green.

The gains in the domestic equities came on the back of positive global market cues and better corporate earnings for the December quarter.

“In the short-term, sentiments influence the market more than other factors. Now, sentiments are positive globally as well as in India. The sentimental support from the mother market is strong since S&P 500 is at record high at 4,850. Domestically the Pran Prathishta at Ayodhya has turned out to be a historic mega event boosting national sentiments substantially. These positives augur well for the market in the short run. Q3 results will impact specific stocks both positively and negatively,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Also Read: India overtakes Hong Kong as world’s fourth-largest stock market by market capitalisation

However, he advises investors to remember that sentimental impact cannot last long.

“Tensions in West Asia and the Red Sea are areas of serious concern. If something goes wrong, the market will be impacted since valuations are high. Therefore, even when optimistic, investors should be cautious,” he added.

Here are 5 key factors behind the stock market rally:

Global cues

Positive trends in the global markets supported the domestic equities. Asian markets traded higher on Tuesday, while the US stock market ended with gains overnight led by technology stocks. The S&P 500 posted a second straight record high close, while the Dow Jones Industrial Average finished above the 38,000 milestone for the first time in history as the fourth-quarter earnings season ramps up.

Japanese shares surged to fresh 34-year highs after the Bank of Japan (BoJ) stood pat on ultra-loose monetary policy. Japan’s Nikkei rose 1% to the highest level since February 1990, bringing year-to-date gains to 10.3%, StuffsEarth reported. 

The MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5%, driven by a 1.8% jump in Hong Kong’s Hang Seng index that surged more than 3% after two straight days of declines.

China’s market rescue package

Chinese stock market rallied after Bloomberg news reported that the state authorities were considering a package of measures to stabilize a slumping stock market. Chinese policymakers are seeking to mobilise about 2 trillion yuan ($278.53 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilisation fund to buy shares onshore through the Hong Kong exchange link, Bloomberg News reported.

Read here: China considers stock market rescue package worth $278 billion: Report

Rally in index heavyweights

Index heavyweights like ICICI Bank, Bharti Airtel, Infosys, Tata Consultancy Services (TCS), Sun Pharmaceutical Industries and Cipla were among the top contributors on the Nifty 50 index.

Other index constituents, such as Reliance Industries, Bajaj Finance, Titan, Dr Reddy’s Laboratories, ITC, among others also led the rally.

Q3 results

The December quarter earnings from major companies like ICICI Bank and Cipla cheered investors. The banking heavyweight rallied over 5% while the pharma major surged more than 7% after the announcement of their Q3 results, lifting the benchmark indices.

“ICICI Bank’s numbers are excellent, beating the street. With ICICI Bank ticking all the right boxes in credit growth, net profit growth and asset quality, the stock is set to lead the rally in large caps,” Vijayakumar added.

Read here: ICICI Bank share price jumps over 5% to 52-week high after Q3 results; should you buy?

Bank Nifty

The Bank Nifty index formed a higher low on the daily chart on January 20 while maintaining the immediate support zone of 45,700-45,600. It broke the immediate resistance of 46,300 and hit a high of 46,580.30 on Tuesday, a breakthrough that analysts believe could trigger short-covering, propelling it towards 46,500 / 46,800 levels.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 23 Jan 2024, 10:21 AM IST

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