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Four factors why Sensex, Nifty closed over 2% higher today

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Four factors why Sensex, Nifty closed over 2% higher today

ICICI Bank was the top Sensex gainer post Q2 earnings after brokerages raised the stock's target price. Other Sensex gainers were SBI (7.90%), Adani Ports (6.62%) and L&T (5.15%).

In a strong rebound for market today, the Sensex and Nifty staged a smart recovery to rise over 2 percent each in afternoon trade. While the Sensex rose 718 points or 2.15% to 34,067, the Nifty gained 2.20% or 220 points to 10,250.

ICICI Bank was the top Sensex gainer post Q2 earnings after brokerages raised the stock's target price.

Other Sensex gainers were SBI (7.90%), Adani Ports (6.62%) and L&T (5.15%). Here's look at factors, which led to the rally in the market.

RBI to inject Rs 40,000-crore liquidity

The Reserve Bank will inject Rs 40,000 crore into the system in November through purchase of government securities as it looks to meet festive season demand for funds.

Lenders surged on the development with the BSE bankex rising 870 points or 3.20% to 28,029 level.

ICICI Bank, Bank of Baroda, SBI PNB and Axis Bank were the top gainers on the bankex.

The move will result in more funds with the lenders in forms of loans and advances in the festive season.

Short covering

Traders resorted to closing their short positions across the market which led the indices higher in trade today. Last week, both key indices Sensex and Nifty recorded their second straight week of losses by falling 966.32 points, or about 3 per cent, and 273.55 points, or 2.7 per cent, respectively.

Mid caps and small caps rally

BSE midcaps and small caps indices rallied on hopes additional liquidity with banks will make for funds available to them from the lenders. The BSE midcap index rallied 2.80% or 388 points to 14,258 level. The small cap index too gained 2.06% or 280 points to 13,877 level.

ICICI Bank shines post Q2

The ICICI Bank stock closed 10.82% or 34.10 points higher at 349.15 on the BSE. The private sector lender's stock rose after the bank reported its Q2 earnings. Brokerages became bullish on the stock after overall provisions went down to Rs 3,994.29 crore from Rs 4,502.93 crore in the year-ago period, while the provision coverage ratio improved by over 4.80 percentage points to 58.9 per cent.

Positive sentiments around the stock were also aided by a 20 per cent rise in retail loans and deposit growth at 12 per cent.