The BSE Sensex on Thursday rallied as much as 280 points or 1 per cent, while the 50-share Nifty edged past the key 8,600 level after nearly three months. July has proved to be a good month for domestic stock markets, with the Nifty gaining nearly 3 per cent so far.
Here are some reasons why markets have gained traction
1) The simplification of rules related to foreign investment, announced by Finance Minister Arun Jaitley, triggered a buying in banking stocks such as Yes Bank and Axis Bank. The move will make it easier for some lenders to raise capital up to a foreign ownership limit of 74 per cent, analysts said.
2) The landmark Iran deal, which is likely to pave way for lifting of sanctions in Tehran, has also helped Indian stock markets. Oil prices rose on Thursday, but Brent prices are down more than 15 per cent from its June peaks on oversupply. India imports 80 per cent of its energy needs, so the tumble in global crude oil augurs well for the economy.
3) The Greek crisis, which roiled financial markets across the world last month, has been resolved, while Chinese stock markets have stabilised after the government took a number of steps to restore the confidence. The turnaround in global cues has resulted in increased foreign flows in to domestic equities.
4) Some market participants expect the Reserve Bank to cut interest rates in its policy meeting on August 4 despite an uptick in inflation. This has further triggered buying interest in stock markets.
5) Finally, monsoons have turned out to be better-than-expectations so far, diminishing concerns about a second straight year of drought this year.
However, market analysts say investors should be cautious given the upcoming monsoon session of Parliament, where key proposals including land acquisition and Goods and Services Tax are expected to be debated.
"Government is facing rough winds on key land acquisition bill, which is definitely a concern," said Deven Choksey, managing director at K R Choksey Securities.
The BSE Sensex closed 248 points higher at 28,446, while the Nifty advanced 84 points to end at 8,608.
Here are some reasons why markets have gained traction
1) The simplification of rules related to foreign investment, announced by Finance Minister Arun Jaitley, triggered a buying in banking stocks such as Yes Bank and Axis Bank. The move will make it easier for some lenders to raise capital up to a foreign ownership limit of 74 per cent, analysts said.
2) The landmark Iran deal, which is likely to pave way for lifting of sanctions in Tehran, has also helped Indian stock markets. Oil prices rose on Thursday, but Brent prices are down more than 15 per cent from its June peaks on oversupply. India imports 80 per cent of its energy needs, so the tumble in global crude oil augurs well for the economy.
3) The Greek crisis, which roiled financial markets across the world last month, has been resolved, while Chinese stock markets have stabilised after the government took a number of steps to restore the confidence. The turnaround in global cues has resulted in increased foreign flows in to domestic equities.
4) Some market participants expect the Reserve Bank to cut interest rates in its policy meeting on August 4 despite an uptick in inflation. This has further triggered buying interest in stock markets.
5) Finally, monsoons have turned out to be better-than-expectations so far, diminishing concerns about a second straight year of drought this year.
However, market analysts say investors should be cautious given the upcoming monsoon session of Parliament, where key proposals including land acquisition and Goods and Services Tax are expected to be debated.
"Government is facing rough winds on key land acquisition bill, which is definitely a concern," said Deven Choksey, managing director at K R Choksey Securities.
The BSE Sensex closed 248 points higher at 28,446, while the Nifty advanced 84 points to end at 8,608.
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