After closing in red for three straight sessions, India’s equity market benchmarks -- BSE Sensex and NSE Nifty50 -- ended higher on Wednesday amid an improvement in global cues and a rally in the major markets. The benchmark indices along with the broader market were under severe selling pressure since last Friday over fears of recession in the US and appreciation of Japanese Yen.
The BSE Sensex surged 874.94 points or 1.11% to close at 79,468 while the NSE Nifty50 climbed 304.95 points or 1.27% to shut shop at 24,297. The broader market indices outperformed the benchmarks with the Nifty SmallCap 100 and Nifty MidCap 100 gaining 2.86% and 2.45%, respectively.
"Global markets experienced a notable rebound after the Bank of Japan's Deputy Governor reassured that the central bank would not raise interest rates during a period of financial instability. The Indian market also witnessed broad-based buying across sectors, with the realty sector seeing a relief rally due to the reinstatement of indexation benefits,” said Vinod Nair, Head of Research, Geojit Financial Services.
He added that the carry trade issue appears to have been eased for now and the focus is on the ongoing RBI policy, which is likely to hold the rate and positive economic outlook.
In the Nifty50 pack, 44 stocks ended higher, with ONGC, Coal India, Adani Enterprises, and Adani Ports gaining up to 7.45%. On the BSE, 25 out of 30 shares ended in the green. Most sectors contributed to the upward movement, with metals, energy, and pharma being the top performers. The volatility index, INDIA VIX, fell 14% to around 16.17, indicating a drop in volatility.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Intermediates, said, "Domestic benchmark indices began higher on Wednesday, driven by strong global sentiment. Technically, the Nifty50 index has been taking support near 24,000 levels and maintaining the 50-DEMA support despite turbulence, resulting in a relief rally. 50-DEMA is currently near 23,980, and as long as the index holding above it relief rally likely to continue. On the higher side, immediate resistance for the index is placed near 24,430, where 21-DEMA hurdle is located followed by 24,700.”
Sarvjeet Singh Virk, Co-founder & MD, Shoonya by Finvasia, said that the recent market volatility has understandably caused concern among investors. He added that while fluctuations are inherent to equity markets, the current scenario appears to be driven more by a reversal in speculative trades, rather than the popping of a bubble or economic disaster.
According to Singh, investors should use these corrections as opportunities to add quality stocks, after a thorough analysis of sectors and themes. “India's robust economic fundamentals and its long-term growth story remain intact, being supported by government capital expenditure and a likely revival in consumption, bolstered by good monsoons and an improving rural outlook,” he said.
Ajit Mishra – SVP, Research, Religare Broking said that although volatility has significantly cooled-off after the sharp surge, there remains potential for further decline. On the index front, a decisive close above 24,500 in the Nifty is needed to ease pressure and trigger a sustained rebound. Given the current conditions, we maintain a cautious outlook and recommend continuing with a hedged approach