The Indian rupee appreciated by 29 paise to close at 94.62 against the US dollar, reflecting a strong sentiment in the domestic market driven by a rally in Indian stocks. The benchmark indices experienced significant gains, with the Sensex soaring over 800 points intraday, indicating a bullish trend. The rally was supported by positive earnings reports and healthy liquidity in the market, which have encouraged investors to buy into large-cap stocks.
The 30-share Sensex opened at 74,337.93 and peaked at 74,682.19, achieving a high of 1.12%. Meanwhile, the Nifty 50 index climbed 231 points, or 1.01%, reaching 23,120.90. According to VK Vijayakumar, chief investment strategist at Geojit Investments, the market's upward trajectory can be attributed to improving earnings growth and the fair valuations of large-cap companies.
- Positive earnings season — The commencement of the Q2 results season has been marked by a series of positive surprises, indicating robust performance in various sectors.
- Heavy buying in key sectors — Notably, the Nifty IT index emerged as the top gainer, rising by 2.5%, while shares of Reliance Industries increased by over 2%.
- US-India trade deal optimism — Comments from US President Donald Trump regarding the nearing finalization of a trade deal with India have further buoyed market sentiment.
Market analysts are optimistic about the future, with expectations that the rupee will consolidate within a trading band of 94 to 94.75 against the dollar. Aamir Makda, a commodity and currency analyst at Choice Broking, noted that the positive global cues, including a softening US 10-year yield, are likely to support this trend. Furthermore, Asian markets have shown strength, with South Korea's Kospi and Japan's Nikkei 225 also recording gains.
However, challenges remain, as Hemang Gor, a senior research analyst at Axis Direct, pointed out that the undertone remains fragile below 23,150. Sustaining above this level could target 23,300, but breaching support at 22,850 may expose further downside towards 22,600. Persistent crude prices and foreign outflows are anticipated to be critical headwinds for the market.
