The Indian stock market witnessed an exceptional performance with Sensex closing at 76,917.88, up 1,225.10 points or 1.62% in just four trading sessions, while Nifty ended at 23,810.85, gaining 370.05 points or 1.58% on Tuesday, November 3. This represents a significant acceleration from the previous session's high of 75,692.78, with the rally driven by falling oil prices, strong earnings by heavyweights including Reliance Industries, and positive investor sentiment. The Bank Nifty index also advanced past the 55,500 level, while the broader markets participated with Nifty Smallcap 100 and Nifty Midcap 100 gaining over half a per cent each. Market breadth turned sharply positive with BSE market breadth firmly positive at an advances-declines ratio of 2,510 stocks against 1,895 declines, with 2,445 stocks advancing against 1,164 declining on the NSE. The rally was led by Reliance Industries shares surging over 10% in the last two trading days and Shriram Finance gaining 7%, with BSE emerging as the top gainer among Nifty 50 constituents, ending 5% higher. Asian Paints and Bharti Airtel ended around 4% higher, while Power Grid Corporation was the worst hit, ending 3% lower. Investors' wealth swelled by ₹14.2 lakh crore during this period, including ₹4.53 lakh crore on Tuesday alone, according to The Financial Express.
Reliance Industries contributed significantly to the positive sentiment after posting record Q2 revenues and profits for the July-September quarter, with growth across all verticals impressing the Street. The company's revenue rose 29%, with its board approving a fundraising plan of up to ₹15,000 crore through non-convertible debentures. Reliance Industries marked its biggest single-day gain since April 7, 2020, contributing the most to the Nifty's gain given its heavy index weight. According to The Financial Express, RIL soared 11.64% to ₹1,299 after the oil-to-telecom conglomerate reported a 40.6% year-on-year jump in net profit and 29% growth in revenue for the September quarter. The surge added a record ₹1.83 lakh crore to RIL's market capitalisation in a single session, with the stock alone contributing 756.86 points or 61.37% of the Sensex's 1,233-point rise. The rally also pushed the combined market capitalisation of RIL and recently listed Jio Platforms past the ₹30-lakh-crore milestone to ₹30.68 lakh crore, with RIL valued at ₹17.58 lakh crore and Jio Platforms at ₹13.10 lakh crore. Reliance Industries has a nearly 8% weight in the Nifty 50 index — the third highest after HDFC Bank and ICICI Bank, and similarly high weight on the Sensex. Thus, a huge rally in the stock as seen on Monday pushes benchmark indices notably higher.
A key contrarian indicator suggests that the market may have entered overbought territory, raising the possibility of a decline as investors sell shares to book profits. The Nifty aggregate put-call ratio (PCR) open interest reached 1.52, its highest since January 5's 1.46, signalling that the market might be overbought. A 1.52 ratio implies that for every 100 call options on Nifty sold, traders have sold 152 puts, hoping that the markets would rise and they could pocket the premium paid by put buyers. This is why the indicator is known as a contrarion one because a higher quantum of puts, instead of being seen as bearish, is seen as a bullish sign. However, when the quantum of puts far exceeds that of calls, caution is warranted. The Nifty is now trading 7.3% above its 52-week intraday low of 22,179.9 on October 8, triggering expectations that markets might be close to topping out and could witness profit-taking in the short term. After the PCR touched a high of 1.46 on January 5 this year when the Nifty was at a record high of 26,373.2, the index plunged 16% till October. Rohit Srivastava, founder of analytics firm IndiaCharts, cautioned that with the aggregate PCR touching 1.52, we may be close to making a top and due for a short-term pull-back if the past is any indication. The market capitalization of BSE-listed companies rose by ₹4.5 trillion, with Foreign institutional investors turning net buyers for the third consecutive day, purchasing shares worth ₹6,856 crore on Tuesday.
The primary driver behind the rally was a sharp decline in crude oil prices, with Brent crude falling over 7% on Monday to $104.80 a barrel after talks between Iranian and Qatari officials rekindled hopes of a peace deal and steadier Middle East supplies. According to NDTV Profit, crude oil prices corrected sharply, with Brent oil slipping below $105 a barrel earlier, after declining 7% in the previous session. The decline in oil prices has also supported the Indian rupee, which is currently trading around the 94.70 level. Easing geopolitical tensions remains the primary factor that could drive crude oil prices lower, said George Thomas, fund manager at Quantum Asset Management. India's stock prices are closely linked to the trajectory of oil, given the country's energy import dependence. For India, which imports a large portion of its crude oil requirements, elevated oil prices increase the import bill, put pressure on the rupee and can fuel domestic inflation. Attacks on tankers in the Strait of Hormuz continue to pose residual risks to shipping and energy supplies, keeping transportation costs elevated, while OPEC+ has maintained its December production targets unchanged, limiting the prospect of near-term additional supply. Renewed US-Iran diplomatic efforts and softer crude prices also helped ease concerns over energy costs and geopolitical risks, as noted by Geojit Investments.
The relative strength of Indian equity markets is evident when compared with global markets, with the Nifty 50 gaining 5.34% since its 52-week low on October 8, while several major global indices witnessed declines. During this period, Japan's Nikkei 225, Hong Kong's Hang Seng and China's CSI 300 declined by 9.93%, 2.51% and 8% respectively, while in the US, the S&P 500 and Nasdaq Composite fell by 3.34% and 8.62% respectively. Among sectors, FMCG led the gains with a 3.65% rise, followed by realty, private banks, financial services and automobiles. According to The Financial Express, Hindustan Unilever, Bharti Airtel, HDFC Bank, Asian Paints and UltraTech Cement were the top Sensex gainers, while Power Grid, SBI, NTPC, Tata Steel and Trent ended among the major laggards. The rally remained concentrated in heavyweight stocks, with HDFC Bank, ICICI Bank and Bharti Airtel together contributing 769 points, accounting for nearly 63% of the Sensex's 1,225-point gain. Except for the Nifty Energy, Metal and PSU indices, all the sectoral indices closed in green, with Shrikant Chouhan from Kotak Neo noting that the market could swing either way depending on the outcome of the US midterm polls, which could have a bearing on oil. The NIFTY50 consolidated between 22,300 and 23,100 levels for the previous five weeks and delivered a strong breakout of this range this week, with the index rallying 2% in the previous week and surging over 2.6% in just two trading sessions this week.
