Nifty ends near 10,000, Sensex jumps over 500 pts; 5 factors aid rally

The market continued its northward journey for fifth consecutive session on June 2 with the Nifty50 closing near the psychological 10,000 mark.

The BSE Sensex rallied 522.01 points or 1.57 percent to 33,825.53 and the Nifty50 gained 152.95 points or 1.56 at 9,979.10.

"The Nifty Index respected 9,900 and kept above it the entire day. This is a positive indication. We are now close to the 10,000 level. 10m050 is a target to trade for. Thereafter, one could initiate a buy on all dips for targets closer to 10,100-10,200," Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments told Moneycontrol.

The broader markets also participated in the rally as the Nifty Midcap index gained over 1.3 percent and Smallcap was up 2.3 percent.

Here are five factors that could have boosted the rally:

Global Rally Despite US-China Trade Woes

Global equity markets traded higher despite unrest and protests in the United States over the killing of George Floyd by police last week, as the reopening of economies and hope of global recovery lifted sentiment.

Germany's DAX was up nearly 4 percent, while Britain's FTSE gained 1.2 percent and France's CAC rose 2.1 percent at 15:45 hours IST.

Asian peers also closed strong today with Japan's Nikkei, Hong Kong's Hang Seng and South Korea's Kospi gaining more than 1 percent each, while China's Shanghai Composite and Australia's ASX 200 rose 0.2-0.3 percent.

Economy Opens Up, Pain is Behind

The market continued to remain in buyers' hand especially after the recent data points indicated that economy has re-opened properly across India barring containment zones. Agricultural activities also remained on track while the monsoon arrived well before time this year, aiding strong hope that production could remain strong this year too.

Auto companies' May sales data was weak compared to same month last year, but good given the gradual re-opening of economic activities. Tractor sales remained strong given the better rabi harvest and hope of normal monsoon this year.

Most of experts feel the worst or pain is behind now given the re-opening the economy and moving towards normalcy which will take another 3-4 months as virus is still roaming.

Rally in Banking & Financials Continue

Banking & financial stocks continued to rally in current run with the Bank Nifty surging 18 percent in five straight sessions on hope that NPA pressure may not be as high as expected during lockdown given the further easing of lockdown measures in Lockdown 5.0.

Nifty Financial Services index also climbed over 17 percent since last week, while today both indices gained over 2 percent as lending activities picked up.

PM's Focus On Building Big Supply Chain

While addressing the annual session of Confederation of Indian Industry (CII), Prime Minister Narendra Modi said, "India's industry leaders need to invest in building robust local supply chains that will strengthen India's position in the global chain."

"India would be completely integrated with the world economy but that doesn't mean it needs to remain dependent on others in strategic sectors," he added.

"We need to make made in India products made for the world. The industry needs to set targets to increase productivity," Modi said, adding that the manufacturing sector and Make in India need to be made employment generators.

Prime Minister in last month announced nearly Rs 21 lakh crore financial package with more focus on Atma Nirbhar Bharat - Self Reliant India. The execution of the same package started during the lockdown.

Technical View

The Nifty50 remained strong after early trade volatility and closed near day's high to form bullish candle on the daily charts.

Experts feel the rally is expected to continue given the momentum and Nifty may surpass 10,000 soon.

"Current chart structure suggesting we may see a decisive break above 10,000 mark in coming session and if we managed to sustain above 10,000 mark then we may see next move towards 10,500 zone in near term. Support for Nifty is coming near 9,900-9,800 zone and resistance is coming near 10,100-10,200 zone," Rohit Singre, Senior Technical Analyst at LKP Securities said.