Nifty reclaims 25,000 as bank stocks play catch up

Mumbai: Benchmark indices Sensex and Nifty staged a recovery from sharp intraday losses on Monday as index heavyweight banking stocks, hitherto laggards amid persistent outflows by overseas funds, benefited from recent foreign portfolio purchases that coincide with a decline in crude oil prices.

The Sensex climbed nearly 600 points from its day’s low, while the Nifty regained the psychologically important 25,000 mark, helping investors look past profit-taking in select sectors. The Sensex rose 107.25 points, or 0.13%, to close at 81,106.65, while the Nifty gained 58.25 points, or 0.23%, to settle at 25,044.65.

BSE and NSE will remain closed on Tuesday, November 10, for Diwali Balipratipada, following Sunday’s Muhurat trading.

“This is profit-taking, not a reversal. The Nifty rose about 12.6% from its October 8 low to 25,030 on November 6, so a pause was overdue,” said Gaurav Garg, head of research at Lemonn. Buying was concentrated in banking stocks, with the Nifty PSU Bank index surging nearly 4% to emerge as the best-performing sectoral index. Nifty Bank and Nifty Pharma were among the other major gainers, rising around 1.5% each. On the other hand, IT, metals and FMCG were the only sectoral indices to end lower.

Garg said the rally had two key drivers – brent crude’s nearly 16% weekly decline from around $118 to $98 a barrel and expectations of relief on long-term capital gains tax. While lower oil prices provide tangible support, tax relief remains speculative. Garg expects markets to consolidate until the February Budget. With the Nifty trading at around 20.6 times trailing earnings, against its 10-year median of 23 times, valuations offer some comfort.

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He recommended investors to stagger fresh investments over three or four instalments rather than chase the recovery, while continuing their SIPs.The Nifty IT index declined more than 1%, with all constituents except Persistent Systems and Wipro ending down. Metal and FMCG stocks faced modest selling pressure. Broader markets largely participated in the recovery. The Nifty Midcap 150 Index rose 0.3%, while Nifty Smallcap 250 was the only major broader index to end lower, declining 0.1%. India VIX, the market’s volatility gauge, fell 5.5% to 17.42, indicating some easing in near-term uncertainty.

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The Nifty’s ability to hold above 25,000 and trade above its 200-day EMA suggests the broader trend remains positive, said Sudeep Shah, head of technical and Derivatives Research at SBI Securities.