Stock market today: Nifty 50, Sensex extend gains to 2nd day, surge nearly 1% each; smallcaps outperform

Stock market today: Indian markets extended their winning run to the second consecutive session on Thursday, March 6, supported by positive global and domestic cues. The prolonged sell-off in domestic equities, which has made India the worst-performing major market since late September, has brought valuations to more reasonable levels, allowing value buyers to step in. 

The Nifty 50 ended the session 0.93% higher at 22,544, while the Sensex closed at 74,340, marking a 0.83% gain from Wednesday's close. The broader market indices also ended in the green, with the Nifty Midcap 100 rising 0.37% to 49,348, while the Nifty Smallcap 100 surged 1.32% to 15,400.

U.S. President Donald Trump announced a one-month exemption for automakers in Canada and Mexico from his 25% tariffs, provided they comply with existing free trade rules, the White House said on Wednesday. This triggered a rally in U.S. and European markets, while Asian markets also gained from the development, ending the session higher. 

Additionally, the continued drop in crude oil prices, which sent Brent crude futures below $70 per barrel for the first time in three years, fueled a rally in crude-sensitive stocks such as paints and oil marketing companies (OMCs). Meanwhile, banking and NBFC stocks gained after the Reserve Bank of India (RBI) announced new measures to inject ₹1.9 trillion into the banking system to boost liquidity.

The drop in the US Dollar index, which fell to around 104 on Thursday, reaching its lowest level in four months, has supported the rally in Indian metal stocks. 

Meanwhile, global brokerage firm Jefferies, in its latest report, stated that historically, India tends to outperform other emerging markets within 90-180 days following a period of underperformance.

It noted that the country’s valuation premium is now closer to average levels, well below its 2024 peak. With the dollar index down 4% from its peak, FPI flows could potentially reverse, as Jefferies' FPI ownership tracker indicates that India's positioning among EM funds is at a decade low. Meanwhile, near-term positives, such as an economic uptick and liquidity easing, may drive a short-term market rebound, it added.

Sectoral Performance: Oil & Gas stocks lead, realty lags

The decline in oil prices sparked a rally in Bharat Petroleum Corporation Ltd. (BPCL), Hindustan Petroleum Corporation Ltd. (HPCL), and Indian Oil Corporation Ltd. (IOC), causing their stocks to end 5% higher in today's session. Fourteen out of 15 constituents of the Nifty Oil & Gas index closed higher, pushing it to emerge as the top sectoral performer, ending the session with a 2.60% gain.

Metal stocks continued their winning streak for the second straight day, as the drop in the US dollar and the stimulus measures announced by China extended the rally. The Nifty Metal index surged 2.34% to 8,888, following a 4% jump in the previous trading session.

Other sectoral indices, including Nifty Pharma, Nifty FMCG, Nifty Media, Nifty Auto, and Nifty PSU Bank, posted gains ranging between 0.66% and 1.47%. On the losing side, Nifty Realty was the only index to end lower, closing the session with a minor decline of 0.17%.

Commenting on today's market performance, Vinod Nair, Head of Research, Geojit Financial Services, said "The Indian indices exhibited resilience, owing to positive global cues following Trump’s softened tariff stance on automakers from Canada & Mexico amidst the weakening dollar index."

"Additionally, a correction in crude oil prices, influenced by a slowdown in demand and further economic stimulus from China, ignited optimism in the energy and metals sectors. Gains were further supported by strength in heavyweight banking and consumption stocks driven by improved liquidity conditions," he further added.

Technical Outlook

Rupak De, Senior Technical Analyst at LKP Securities, said, "The Nifty continues to rise, filling the recent gap on the daily chart. The RSI is recovering from a historical low and is currently in a bullish crossover. In the short term, the sentiment appears to favor the bulls. On the higher end, the index may move towards 23,750–23,800. The sentiment is likely to remain strong unless the Nifty falls below 22,300."

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