D-St defies Asia rout! Sensex surges over 600 pts, Nifty above 24,650 as Diwali fireworks continue. What’s ahead?

The Indian stock market extended its ongoing rally this week, with Sensex and Nifty recording up to 0.5% gains even as global markets crashed as the AI frenzy fizzled out following US President Donald Trump’s defeat in the midterm elections.

Sensex jumped over 600 points, while Nifty was above 24,650 during Friday’s trading session. The benchmark indices have jumped up to 7% in the past five days.

Mahindra & Mahindra shares jumped around 5% to lead gains on Sensex, while Titan, Infosys, HCL Tech, TCS and Bharti Airtel shares rose around 2% each to follow. Bucking the trend, Asian Paints, Bajaj Finance and Power Grid shares dropped more than 2% each to lead losses on the benchmark index.

Also read | Infosys, Wipro, TCS and other IT stocks rise up to 3% amid US AI rout; is the bubble bursting?

While benchmark indices extended gains, broader markets however, crashed. Nifty Smallcap 250 index plunged nearly 2% while Nifty Midcap 100 index dropped more than 1% on Friday morning. As a result, the overall market breadth turned negative, with NSE seeing 2,236 declines against 824 advances, while 94 stocks remained unchanged.

Among the sectors, Nifty Metal plunged more than 2% to lead losses, while Nifty IT gained 1.5% to lead gains. India VIX, which measures volatility in the market, soared nearly 7% to near 17.

What lies ahead for Dalal Street?The blood bath in the US markets will impact most other markets today, but India is likely to be the least impacted, said V K Vijayakumar, Chief Investment Strategist at Geojit Investments. He noted that the big rout of 5.6% in Nasdaq was triggered on concerns of a big slowdown in data centre spending since the Democrats are opposed to massive data centre investment. This tech rout, particularly the sharp deceleration in AI trade will turn out to be beneficial for India, according to the analyst.

“It is important to note that the FIIs have bought equities for Rs 35781 crores in the last five trading days. Despite selling and profit booking by DIIs the market is likely to remain resilient since FII buying will continue in the changed global market construct,” he added.

Also read | Bulls roar! Market value of BSE-listed companies crosses Rs 500 lakh cr for first time. More upside ahead?

It is important to recognise the fact that this ongoing rally has fundamental support from impressive earnings growth which has come better-than-expected. “A significant factor which investors should understand is that this rally is driven by large-caps which had become attractively valued. Note that yesterday while the Sensex rallied 2.6%, the Smallcap 100 index crawled by a measly 0.67%. It is evident where money is going. For financials, tech and auto stocks there is more upside,” Vijayakumar said.

Technical view on Nifty

Nifty’s staying below 24,800 keeps the undertone subdued, said Hemang Gor, Senior Research Analyst of Derivatives and Technical Research at Axis Direct. He said the support lies at 24,300 (a break risks 24,000).

If the index manages to reclaim 24,700, then it can target 25,000, the analyst added.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.