What is fuelling the market rally?

Since the start of this month, the benchmark indices BSE Sensex and NSE Nifty have rallied nearly 6 per cent each. This strong stock market rally comes ahead of India's general election which will be held in May 2019.

Factors like tapering of trade war tension, inflow from FII have fuelled this broad-based rally across sectors. The mid-cap and small-cap index in March have given a return of 4 per cent and 6 per cent, respectively.

One of the major factors that caused this rally was a massive net inflow of Rs. 17,919.06 crore from FIIs this month. Whereas DIIs have withdrawn their investments worth Rs. 8,979 crores. The strong inflow from FII has led to the strengthening of the Indian Rupee against the US dollar. The domestic currency has strengthened to the Rs. 68.86 mark.

In the coming weeks, the key event that would have a major impact on the global market is the US Federal Reserves' interest rate decision. Also, factors like Brexit issue and OPEC's supply cut are likely to influence the Indian Market.

Going ahead, other than general elections there is no major domestic event that would have a significant influence on the market. But, international factors like Fed meeting, oil prices and FII investments will direct the market trend.

In the start of this week, on Monday, the rally continued and BSE Sensex and NSE Nifty ended on positive note. BSE Sensex closed at 38095.07, up by 0.19 per cent.

In this rally, one should act wisely and follow the famous quote of Peter Lynch, “Cutting flowers and watering weeds”.