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Sensex soars over 350 points in early trade; 5 factors that fuelled this rally

Benchmark equity indices BSE Sensex and NSE Nifty spurted nearly 1 per cent in early trade on Friday. The BSE Sensex climbed as much as 358 points to 33,605.11, while the NSE Nifty index surpassed 10,350-mark.

As many as 47 stocks in Nifty index were trading in the green with Vedanta, Adani Ports, Hindalco and HDFC Bank gaining over 2 per cent each. Larsen & Toubro was up 1.85 per cent at Rs 1210.75.

On the other hand, Tech Mahindra, Kotak Mahinra Bank and Asian Paints were down between 0.15 per cent and 0.55 per cent.

Going by the buzz, here are five factors which are keeping bulls busy on Dalal Street:

Exit poll push: The stock market reacted positively to the exit poll results released after trading hours the previous evening that showed the Bharatiya Janata Party will retain its two decade stronghold on Gujarat and clinch victory in Himachal Pradesh from the Indian National Congress. Gujarat elections, which concluded on Thursday, assumed significance for investors as they were considered a test of the popularity of the Narendra Modi-led BJP.

Not expensive at all: Indian equity markets are looking attractive at present levels against global equity markets. According to Credit Suisse, the domestic market is not expensive compared to its global peers, given the robust corporates earnings in the second quarter that was one of the best in three years. While the price-to-earnings ratio for the market is high, it is not expensive compared to global equities but that is taken care of by the corporate scorecard in Q2 which was one of the best in three years with aggregate earnings seeing no cuts.

FPIs buying: Foreign portfolio investors poured over Rs 1,000 crore in the secondary markets in the past two trading sessions with gross purchases and gross sales stood at Rs 12,966 crore and Rs 11,917.93 crore, respectively, NSDL data showed.

Technical reason: A long lower shadow was formed on daily chart which resembles a hammer on the candles, provides further credibility to the support area. The NSE Nifty index also closed above 50-DMA on Thursday. According to market analysts, some follow-through of short covering which led to Thursday's recovery might continue. “Area of 10,330-10,360 need to be watched on the upper side,” said Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory.

Appreciating rupee: The rupee extended its gains for the second day in a row and scaled a fresh 3-month high of 64.12 in early trade on Friday. The currency opened 19 paise up at 64.15 against dollar.

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