Sensex rises 450 points, Nifty reclaims 24,000 in a sharp rebound. What lies ahead?

Sensex jumped around 450 points to 76,958, while Nifty 50 rose around 126 points to 24,007, as seen at 9.26 am. This came after Sensex and Nifty sharply crashed more than 2% on Wednesday after US President Donald Trump said that the ceasefire with Iran was “over”.

Eternal shares were the top gainers on Sensex, jumping more than 3%. Titan, Sun Pharma, Bharti Airtel, ICICI Bank, Trent, Asian Paints and other stocks rose more than 1% each to follow. Bucking the trend, IT stocks including Infosys, TCS, HCL Tech and Tech Mahindra dropped up to 2%.

The renewed optimism came as India VIX, which measures volatility in the market, dropped more than 7% to 13.63 after skyrocketing 26% in the previous session. Broader markets also moved into the green, with Nifty Midcap 100 and Nifty Smallcap 100 indices gaining up to 1%.

Sectorally, Nifty Consumer Durables and Nifty Realty gained up to 2% to lead gains. Nifty IT meanwhile dropped 1.5% to lead losses. The overall market breadth was positive, as NSE saw 2,211 advances and 405 declines, while 84 stocks remained unchanged.

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Oil prices rise

Oil prices continued to rise, with Brent crude futures nearing $79 per barrel after US President Donald Trump said yesterday that the interim agreement with Iran to end the war was “over”, stoking fears of a fresh escalation in the Middle East. “They are scum. They are sick people. They are led by sick people. As far as I am concerned, it is just a waste of time dealing with them,” Trump told reporters, spooking investors.

FII remain net buyers

Foreign investors continued to remain bullish on Dalal Street, remaining net buyers of Indian equities for the sixth consecutive session on Wednesday amid the market crash. They net purchased shares worth Rs 1,962.80 crore yesterday, according to provisional data on NSE.

Rupee meanwhile opens at 95.55 against the US dollar, nearly unchanged from the previous closing level fo 95.5550. “Market participants will continue tracking developments in the US-Iran conflict, crude oil prices, and global risk sentiment for further direction. Technically, the rupee is expected to trade in the 95.20–95.80 range in the near term, with volatility likely to remain elevated,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.

What lies ahead?

Geopolitics has again played spoilsport with the Indian market, which has been slowly strengthening, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He noted that Trump’s statement that the ceasefire with Iran is over triggered sharp selling in the market shaving off 516 points from the Nifty yesterday, which is almost 50% of the recent gains.

“Long unwinding and fresh shorts might have played an important role in this sell-off. The spike in Brent crude to around $80 raised concerns in the market. However, there are market indications that things may not deteriorate as feared. First, Brent at $80 is not a problem. It won’t create a BoP crisis. The crisis will reemerge only if the tensions lead to the closure of the Strait of Hormuz again and consequently crude spiking above $ 100. The present futures do not reflect such a pessimistic scenario,” the analyst added.

Another important trend is that the trend of FIIs turning buyers continues, according to Vijayakumar. He added that this trend may continue if crude remains stable. Large caps generally, and in financials and automobiles in particular, are likely to remain resilient, as per the analyst.

Technical view on Nifty

Going forward, it will be crucial to watch whether the Nifty manages to hold the 23,800 support level, according to Rupak De, Senior Technical Analyst at LKP Securities. He added that a decisive break below 23,800 could extend the ongoing corrective phase, while sustained trading above this level may pave the way for a meaningful recovery in the near term.

(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)