After the September crash, it looked like the market would end the year either flat or negative, but the recovery since October lows indicated that benchmark indices are heading towards positive close for the year 2018.
The 30-share BSE Sensex and the 50-share NSE Nifty climbed 9 percent each from October lows while the year-to-date gains stood at 6.7 percent and 3.6 percent, respectively.
The sharp rally after September crash was attributed to steep fall in oil prices resulting in rupee appreciation, liquidity availability in debt market from RBI after IL&FS-led credit crisis in NBFCs, and easing trade tensions between US and China.
"Oil prices slid further and a drop in bond yield raised investor confidence. Strong rupee and fall in yield eased the liquidity concerns of the market," Vinod Nair, Head of Research, Geojit Financial Services told Moneycontrol.
But the global markets have been concerned about global growth after China's weak economic data last week and lowering of growth target by Japan for 2018 and 2019, which all put pressure on crude oil prices.
"With lack of any fresh positive domestic triggers and uncertain global cues, some consolidation in the Indian market cannot be ruled out at higher levels," Jayant Manglik, President at Religare Broking said.
He further said any correction at this juncture in fundamentally sound companies should be considered as a healthy buying opportunity for investors. "Market participants would keep close watch on the movement of crude oil prices, currency and global developments."
Further, GST meet outcome and the US Fed meet scheduled this week could induce volatility across the indices, he feels. Hence, he advised traders to avoid risky leveraged positions.
In the rally since October 26, the broader markets also participated with the BSE Midcap index rising over 10 percent and Smallcap gaining more than 7 percent.
Among sectoral indices, auto (up 9.7 percent), bankex (11.87 percent), capital goods (13.80 percent), FMCG (8.6 percent), IT (7 percent) and realty (15 percent) gained the most while metal was the worst performer, down 4 percent.
Around 75 percent of BSE 500 stocks reported positive returns, out of which top 75 stocks climbed more than 20 percent and top 10 stocks rallied 45-100 percent.
The list stocks includes 8K Miles Software, PC Jeweller, Linde India, Infibeam Avenues, BEML, Sequent Scientific and Reliance Communications which shot up more than 57 percent.
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Source: Moneycontrol
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