Sensex up 560 Pts, Nifty Above 23,000. Know Reasons Behind Stock Market Rally

Indian benchmark indices surged for the fourth-consecutive session on March 20 after the U.S. Federal Reserve decided to keep the interest rates unchanged. A rally in information technology (IT) stocks and heightened buying in domestic equities lifted the market sentiment.

Sensex jumped by 564.77 points or 0.74% to clock an intraday high of 76,013.82, while Nifty went up by 163.5 points or 0.71% to 23,071.10. The rally in the equity markets can be attributed to IT heavyweights as Nifty IT scaled up by 2.2% in the early trade.

Among the major gainers on the Nifty, Wipro, Infosys, and Tata Consultancy Services soared by nearly 3%. Bharti Airtel and Eicher Motors were also among the major gainers.

Key reasons driving the market

1. Fed’s dovish stance on interest rates

The U.S. Federal Reserve expressed its willingness to slash the interest rates later in the year despite inflationary pressure from tariffs. Fed Chair Jerome Powell stated that the impact of tariffs on inflation is likely to be temporary. Powell shrugged off recessionary concerns, citing they were “not high,” which helped ease market nerves.

“Markets will read this as a slightly dovish stance, with the Fed not overly concerned about economic slowdown or inflation. Both stocks and bonds reacted positively,” Bloomberg quoted Christian Hoffmann of Thornburg Investment Management as saying.

2. Domestic market cues

Market experts claimed domestic consumption-driven stocks have found a strong footing in the benchmark indices. Stocks, including Kotak Mahindra Bank, Bajaj Finance, InterGlobe Aviation, and Muthoot Finance, saw their 52-week highs in the recent sessions, reflecting upbeat investment activity in these segments.

“Beaten-down themes like defence and shipping are also witnessing a revival, while consumer-facing digital stocks remain on a strong footing,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

3. Strong developments in the U.S. markets

The U.S. stock market ended with positive gains following Fed’s decision to keep the interest rates unchanged. Dow Jones Industrial Average jumped 383.32 points or 0.92% to 41,964.63, the S&P 500 rose 60.63 points or 1.08% to 5,675.29, while Nasdaq Composite soared by 246.67 points or 1.41 per cent to 17,750.79.

4. Technical Outlook

Anand James, Chief Market Strategist at Geojit Financial Services, projected volatility within the 23,100-22,730 range in the near term. James suggested that if the index falls below 22,800, it could signal a larger corrective move. Resistance is estimated at 23,460-23,500, where 23,807 is identified as the next short-term target.