Positive global cues also supported the buying. However, analysts expect volatility as the monthly futures and options (F&O) contracts are set to expire later in the day.
“In this volatile market, where dips and bounce backs are sharp, the directional trend is upwards. The ‘higher highs’ & ‘higher lows’ indicate the long-term bullish trend. The fundamental reason for this trend, which is global, is the abundant liquidity available in the global financial system and the Fed’s declared commitment to keep liquidity flowing and maintaining interest rates at historical lows,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“The takeaway from this is that markets can remain buoyant for an extended period of time. While riding this bull run investors will have to remember the fact that valuations are high and there is risk ahead. Financials, particularly banks, appear strong fundamentally.”
Factors driving the market
- Fed stands behind growth: US Federal Reserve Chair Jerome Powell, testifying before the House of Representatives Financial Services Committee, continued adding weight to the US central bank’s promise to get the economy back to full employment, and to not worry about inflation unless prices begin rising in a persistent and troubling way.
- US bond yields rise: Benchmark US Treasury yields hovered near a one-year peak hit in the previous session. The dollar languished near three-year lows versus riskier currencies.
- F&O expiry: Traders are expecting volatile moves as February contracts are set to expire today. Moreover, yesterday’s chaos due to technical glitch at NSE will also be in the mind of traders.
- Commodities on a high: Prices of commodities continue to remain high, reflecting recovery in economic health. This is also keeping metal stocks buoyant as they see a lot of demand from investors.
How are the blue chips doing?
After opening in the green, benchmark indices strengthened their lead. At 10:10 am, BSE flagship Sensex was up 413 points or 0.81 per cent at 51,195. NSE benchmark Nifty followed, adding 147 points or 0.98 per cent to 15,129.
