NEW DELHI: India’s equity market surged sharply on the first day of the December derivatives series with the benchmark indices - BSE Sensex and NSE Nifty - advancing more than 1.20 percent each. The sharp rebound after three sessions of losses was supported by optimism over a potential rate cut by the US Federal Reserve in December, along with expectations of a 25-basis-point repo rate cut by the Reserve Bank of India early next month. Additionally, easing crude oil prices, driven by hopes of progress toward peace between Ukraine and Russia, also improved investor sentiment.
"Domestic equities experienced significant gains, driven by the festive "Santa Claus rally" in global markets. This uptrend was fuelled by robust retail and domestic institutional investor (DII) inflows, while foreign institutional investor (FII) flows remained modest,” said Vinod Nair, Head of Research, Geojit Investments.
The Sensex closed with a gain of 1023 points, or 1.21 percent, at 85,609.51, while the Nifty 50 settled at 26,205.30, up 321 points, or 1.24 percent. In the broader market, the BSE Midcap index jumped 1.32 percent, while the Smallcap index ended 1.23 percent higher.
The rally made investors richer by Rs 6 lakh crore as the overall market capitalisation of BSE-listed firms shot up to Rs 475 lakh crore from Rs 469 lakh crore on Tuesday.
Nair stated that on a global scale, market sentiment improved with rising expectations of a US Federal Reserve rate cut in December, alongside softer US yields and a weaker dollar. “Additionally, a 1 percent decline in crude oil prices helped to ease inflationary concerns. Furthermore, increasing optimism surrounding a potential truce between Russia and Ukraine is enhancing risk appetite, fostering a positive outlook for the upcoming year,” he said.
On the domestic policy front, the Reserve Bank of India (RBI) is widely anticipated to implement a 25-basis-point rate cut in December, supported by moderating inflation and a dovish stance.
Wednesday’s rebound drew strong support from the top three heavyweights - HDFC Bank, Reliance, and ICICI Bank - which together account for nearly 30 percent of Nifty’s weight, cushioning the index and driving buying momentum. On the sectoral front, all sectors ended in the green with Nifty Metal and Oil & Gas emerging as the top two sectoral gainers, gaining 1.7-2 percent. On the stock front, JSW Steel and HDFC Life ended up as the top gainers, while Bharti Airtel and Adani Enterprise emerged as the top two losers.
Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities said that looking at key levels, the zone of 26,270–26,300 is likely to act as an important resistance zone for the Index. Any sustained move above 26,300 could drive a fresh leg of rally in the index, potentially taking it higher towards 26500, followed by 26700. On the downside, the support has shifted higher in the zone of 26,050-26,000, he added.
Ajit Mishra – SVP, Research, Religare Broking said that the rebound from the crucial 20-DEMA reinforces the prevailing uptrend. We maintain our positive outlook and recommend continuing a “buy-on-dips” approach unless the index decisively breaks below 25,800. On the upside, we now expect the 26,300–26,500 zone to act as the next resistance, added Mishra.