Sensex, Nifty50 leap to 11-week closing highs on HDFC twin boost: Key factors influencing market now

HDFC, HDFC Bank, HDFC Life, Adani Ports, Kotak Mahindra Bank, Hero MotoCorp, Hindalco and Divi's -- rising between 2.5 percent and 9.8 percent -- were the top blue-chip gainers. On the other hand, only four stocks in the Nifty50 basket finished below the flatline: Infosys (down 1.1 percent), Tata Consumer (0.4 percent), Titan (0.2 percent) and JSW Steel (0.1 percent).

Besides the HDFC twins, Kotak Mahindra Bank, ICICI Bank and Larsen & Toubro were the biggest contributors to the upmove in both headline indices.

Geopolitical uncertainty: Global equities rose but cautiously amid talk of yet more sanctions against Russia over its invasion of Ukraine.

Crude oil: Oil rates edged higher but stayed far below their recent peaks. Brent was at $105 a barrel and WTI at $100 a barrel at the last count. India meets the lion's share of its demand for oil through imports.

Higher interest rates: Last month, the Fed announced its first hike in interest rates in more than three years. US central bank officials favour sharper hikes to curb a surge in inflation.

Accelerating inflation: Higher input costs have fuelled fears about stagflation across global financial markets. Businesses in India as well as the world continue to struggle against a sustained rise in commodity rates.

FII outflows: Foreign institutional investors have been net sellers of Indian shares for six months in a row. FII outflows from October through March have stood at Rs 2.3 lakh crore, provisional exchange data shows, though DIIs have made net purchases to the tune of Rs 1.7 lakh crore.

Concerns over slower-than-expected economic recovery: Official data in end-February showed India's GDP expanded a slower-than-expected 5.4 percent in the December quarter. Economists in a CNBC-TV18 poll had pegged the expansion at 5.7 percent.

High equity valuations: Experts have time and again flagged expensive valuations of Indian equities. 

COVID: Investors are once again tracking updates about the pandemic closely ever since rising infections triggered curbs in a major industrial belt in China.

The entire BFSI basket got a boost from the news, reflected in the Nifty Financial Services' surge of 4.6 percent. The index emerged the top gainer among NSE's sectoral gauges. The Nifty Bank and Private Bank indices jumped around four percent each.

"The market was lifted by the announcement of the merger between HDFC Bank and HDFC. The focus will now be on (quarterly) earnings reports and the RBI's policy meeting this week," said Vinod Nair, Head of Research at Geojit Financial Services.

HDFC and HDFC Bank shares finished the day close to 10 percent higher each -- their biggest intraday gain in 13 years. Under the scheme of amalgamation, shareholders will get 42 shares in HDFC Bank for every 25 shares held in HDFC.

The India VIX -- also known as the fear index -- cooled off 4.6 percent to 24.1 during the session, reflecting the across-the-board strength in the market. Last month, Russia' move to invade Ukraine had sent the index spiking to a 20-month high of almost 34.

In the midcap and smallcap segments, Godrej Agrovet, Easy Trip, Ujjivan Small Finance and RailTel -- gaining around 10-19 percent -- were among the top gainers. On the other hand, Team Lease, Lux, Nocil and FDC -- declining 2-5 percent -- were among the top losers.

Overall market breadth favoured the bulls, with an advance-decline ratio of 4:1 as 1,662 stocks rose and 442 fell on NSE.

Geojit's Nair expects a decent start to the Q4 corporate earnings season supported by the IT sector and sees the RBI holding key rates and continuing with its 'accommodative' stance.

European shares followed Asian markets higher though gains in healthcare names were offset by losses in banking and some industrial stocks. The pan-European Stoxx 600 index was up 0.4 percent in early hours.

S&P 500 futures were up 0.1 percent, suggesting a soft start ahead on Wall Street.

Ajit Mishra, VP-Research at Religare Broking, reiterated that the contribution of the banking pack is critical for the Nifty to test 17,800-18,100 levels though most sectors are participating in the market.