Frontline indices, the Sensex and the Nifty 50, ended with healthy gains for the second consecutive session on Tuesday, 17 March, tracking positive global cues.
The Sensex rose 568 points, or 0.75%, to close at 76,070.84, while the Nifty 50 settled at 23,581.15, rising 172 points, or 0.74%.
Gains were broad-based, unlike Monday when the mid and small-cap indices ended lower. The BSE 150 Midcap index jumped 1.08%, while the BSE 250 Smallcap index climbed 0.43% on Tuesday.
Over two sessions, the Sensex has gained more than 1,500 points, or 2%, while the Nifty 50 has jumped 430 points, or nearly 2%.
Investors earned more than ₹3 lakh crore in just two sessions as the overall market capitalization of BSE-listed firms rose to over ₹433 lakh crore from nearly ₹430 lakh crore on Friday.
What is driving the Indian stock market higher?
The rally in the Indian stock market over the last two sessions has been driven primarily by short covering after the recent drubbings.
On Tuesday, positive global cues seem to have triggered buying in the second half of the session, even as crude oil prices continue to trade above $100 per barrel and the Indian rupee remains near a record low.
According to PTI, provisional figures showed that the Indian rupee declined 10 paise to close at a record low of 92.38 against the US dollar on Tuesday.
The US-Iran conflict continues with strong intensity even as reports suggest that Washington and Tehran have reopened a communications channel in recent days. Meanwhile, according to media reports, Israel has claimed that Iran’s security chief, Ali Larijani, has been killed in a strike.
While geopolitical risks persist, the auto, metal, bank, and financial sectors are witnessing healthy buying as investors accumulate quality stocks available at lower prices.
Nifty Metal (up 2.82%), Auto (up 2.11%), and Realty (up 1.80%) clocked solid gains. Nifty Bank and Financial Services indices rose by almost 1% each.
Barring Nifty IT (down 0.97%) and FMCG (down 0.75%), all sectoral indices ended higher.
“The market extended its gains, driven largely by bargain hunting by domestic investors. Cyclical sectors such as autos, metals, and financials continued to be leaders rebounding after being among the worst affected during the sell-off,” Vinod Nair, Head of Research, Geojit Investments Limited, noted.
However, Nair warned that conflict-related uncertainties persist, and it is too early to conclude that this reversal is sustainable in the short term.
On a monthly basis, the Sensex and the Nifty 50 are still more than 6% down each, looking set to extend losses for the fourth consecutive month.
Experts say the macro outlook for the country has not yet deteriorated, so the market correction, which has dragged valuations lower, is an opportunity for long-term investors.
Nifty’s technical outlook
Technical experts see some positive signs on technical charts, which indicate the pullback may continue.
Shrikant Chouhan, Head- Equity Research, Kotak Securities, highlighted that a bullish candle on the daily charts and an intraday continuation pattern indicate that a pullback is likely to continue in the near future.
“For day traders, 23,350 and 23,300 would act as crucial support zones. Above these levels, the pullback could continue till 23,800. Further upside may also persist, potentially lifting the index to 23,950. On the flip side, below 23,300, sentiment could change. If the index drops below this level, traders may prefer to exit their long positions,” said Chouhan.
According to Rupak De, Senior Technical Analyst at LKP Securities, the Nifty 50 has given a falling channel breakout on the hourly chart, suggesting a rise in optimism. Besides, the index has moved above the 21EMA on the hourly timeframe.
“The sentiment is likely to remain slightly positive, with a possibility of a rise towards 23,800–24,000. On the lower end, however, crucial support is placed at 23,400. A fall below this level might reactivate the bears in the market. Below 23,400, Nifty may fall back to the recent low of 22,950,” said De.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
