Sensex jumps 564 points, Nifty ends above 23,400: 5 reasons behind today's market rally

The equity benchmark indices BSE Sensex and NSE Nifty ended higher on Monday (September 21), with the Nifty gaining 68 points to close above the 23,400 mark at 23,414.

The Sensex rose 564 points to 74,859, while the Nifty Bank gained 112 points to 56,471. The Nifty Midcap index, however, fell 178 points to 62,013.

Pharma stocks rally despite USFDA observations

Pharma stocks surged during the session, with Cohance Lifesciences gaining more than 5% despite observations from the US Food and Drug Administration (USFDA) for its active pharmaceutical ingredient (API) unit.

Heavyweights drive Nifty higher

Reliance Industries, ITC and HDFC Bank were among the stocks that contributed the most to the Nifty's gains. Patanjali Foods surged nearly 8% following positive commentary to CNBC-TV18.

Capital market stocks decline

Capital market stocks ended lower, with BSE Ltd falling nearly 3%. Oracle Financial Services Software (OFSS) declined more than 8% following reports of concerns related to its parent company's debt.

Rain deficit forecast lifts Voltas, Blue Star

Voltas and Blue Star gained up to 3% following the India Meteorological Department's forecast of a rain deficit. ESDS Software snapped a three-day losing streak, ending 5% higher.

Block deals, sanctions update weigh on select stocks

Lenskart and Anupam Rasayan fell more than 3% each following large trades through block deals. Welspun Corp, Refex Industries and Tega Industries gained following order wins, with Tega Industries hitting a 52-week high. Textile companies declined following an update on Russian sanctions bills, with Gokaldas Exports falling more than 4%.

From the Sensex basket, UltraTech Cement Ltd, HCL Technologies Ltd, Eternal Ltd, Nestle India Ltd, Dr Reddy's Laboratories Ltd and Titan Company Ltd were the major gainers.

Bharti Airtel Ltd, Power Grid Corporation of India Ltd, Infosys Ltd, SBI Life Insurance Company Ltd, Tata Motors Passenger Vehicles Ltd and Adani Ports & Special Economic Zone Ltd were the biggest laggards.

Ashish Chaturmohta, Managing Director and Fund Manager, JM Financial Ltd, on markets and various sectors, said, "As far as the broader markets are concerned, I think we are going to trade very, very sideways because, obviously, a lot of these large caps are still not ready to participate in the rally. But definitely, there are pockets which are showing very strong strength, obviously due to the kind of TAM which is expanding.

For example, within defence and aerospace, aerospace is an industry where we see that, obviously, from a valuation perspective, it looks like it is trading at a rich valuation. But we need to understand that a lot of these companies are operating at a very strong EBITDA margin profile of between 30% and 40%.

If you look at most of these companies, their aerospace business is going to grow almost two to three times from the current levels over the next three to four years. So, we are talking about very, very strong growth in terms of the top line for a lot of these aerospace precision component manufacturers.

And obviously, in terms of the global market, it is also going to expand significantly because there is an almost 17,000-jet backlog of orders, and the execution timeframe has moved from four-and-a-half years to seven years.

All put together, we believe the biggest tailwind is happening in the sector, and companies like Azad Engineering, Unimech, and Sansera are going to be big beneficiaries of this megatrend which is emerging in the aerospace industry. Second, Mangalam, we believe that this entire CDMO-CRDMO space is looking quite promising."