The benchmark indices of the Indian stock market opened higher for the fourth straight trading day on Tuesday. BSE's Sensex opened 0.9 percent higher at 39,336 while the NSE's Nifty 50 index opened above the mark of 11,600.
While the gains lost momentum after a strong opening, the atmosphere in the market remained positive largely on the following factors.
1. Trump's returns to the White House
American President Donald Trump left the hospital to return to the White House on Monday, where he will continue being treated for COVID-19 following his positive diagnosis last week. While his health has shown improvement, White House physician Dr Sean Conley warned that "he may not be entirely out of the woods yet."
On Tuesday, Asia's stock markets edged higher, cautiously adding to gains made with an improvement in both Trump's health and prospects for a US stimulus package. Further, stocks in Asia-Pacific were higher as the Reserve Bank of Australia (RBA) kept its current policy settings on hold.
Early indicators also showed that the European and American stocks were set to open slightly higher.
Sentiments of the global markets also affect Indian stocks.
2. Q2 results anticipation
The Q2 results season is set to begin on 7 October with TCS (Tata Consultancy Services). Investors, as well as brokerages, are betting on big names in the IT sector ahead of the results for the September-ended quarter. After TCS' announcement on consideration of a buyback plan at its board meeting on 7 October, investors anticipate other cash-rich tech companies to make similar announcements.
Promising September data from automobile companies and recovery in banking stocks also improved market sentiments. Banking and finance company stocks have the highest weightage among sectors on Sensex and Nifty.
3. Positive Q2 updates from major movers
Tata Motors shares rose nearly 8 percent on Tuesday after its arm Jaguar Land Rover reported a 50 percent growth in September quarter sales at 1.13 lakh vehicles on a sequential basis.
On Tuesday, shares of Housing Development Finance Corp Ltd rose close to 5 percent to a high of Rs 1,874.25 and shares of HDFC Bank climbed 2.4 percent to Rs 1,141, a seven-month high, after the two financial institutions provided their positive quarterly updates ahead of the Q2 earnings results.
4. Rupee's gains
The rupee showed weakness at the start of the week but received support from a muted US dollar. It opened 13 paise higher at 73.16 per dollar against the previous close of 73.29.
A rare situation of India seeing its strongest current account surplus in a decade and stock inflows are supporting the domestic currency.
The country could post $72.5 billion in balance-of-payment surplus for the fiscal year ending March, according to Barclays Plc., which would be the most since financial year ended March 2008.
The Indian rupee has advanced over 2 percent in July-September even as the number of COVID-19 infections in the country surpassed the 66 lakh level.
A sharp fall in imports due to COVID-19 caused India to posted a record current account surplus in the April-June quarter. Further, the nation's stock markets have lured $6.5 billion of inflows in the September-ended quarter largely due to share sales by banks and Reliance Industries Ltd's selling of parts of its retail business to foreign institutional investors.
Services PMI (Purchasing Managers' Index) for September stood at 49.8 from 41.8 in August and 48.7 in September 2019, as per data released by IHS Markit on Tuesday. Even though the reading was still in the contraction territory for the month, it was the highest since February this year, indicating that service sector activity has recovered to pre-COVID levels.
Data released last week by IHS Markit showed that manufacturing PMI was at 56.8 in September, the highest reading since January 2012.
The composite Purchasing Managers Index, which combines manufacturing PMI and services, stood at 54.6 in September when compared to 46 in August and 49.8 during the same period last year.