Despite relatively subdued volatility, both the 30-share Sensex and the Nifty50 oscillated between gains and losses through the session before ending the day with strong advances. The fear index India VIX closed at 21.60, down 4.60%.
HDFC Bank contributed most to the turnaround and was followed by RIL, India’s most valuable stock by market capitalisation (Rs 18.9 lakh crore). ICICI Bank, SBI were next in line will with meaning full contributions from Mahindra & Mahindra (M&M) and Bajaj Finance.
Sensex finished the day at 75,502.85, surging 939 points or 1.3%. It broke its three-sessions losing streak.
Market expert Sunny Agrawal, Head – Retail Fundamental Desk at SBI Securities called this a short covering across rate sensitive sectors like banks, auto and NBFC. He did not attribute any other big reason to the bulls’ comeback.
Agrawal said that banks were instrumental in changing the investors’ towards the final session. In his view, banks valuation are now attractive.
Nifty Bank which ended with gains of 1.2%, has slipped nearly 11% over the past month. Stalwarts like SBI, ICICI Bank and HDFC Bank have fallen between 9% and 12% in this period.Nilesh Jain, Vice President – Head of Technical and Derivative Research at Centrum Finverse called this a rebound after sharp correction that has put markets in the oversold territory.
Sectorally, auto and consumer stocks also saw strong buying trends.
Fantastic four
HDFC Bank shares today ended at Rs 838.80 on the NSE, gaining by Rs 21.80 or 2.7%. It enjoys the highest weight in Nifty (11.83%) and is followed by ICICI Bank (8.58%). The latter finished the session at Rs 1,267.60, gaining over 1%.
RIL (8.2% weight) was also up 1% at the closing time while SBI (4.34%) ended its three-sessions losing streak to close 1.6% higher at Rs 1,063.90.
Market outlook
Nifty is still not out of the woods, said Jain as he mentioned that the index defended the 23,000 level on a closing basis while witnessing a strong rebound. “The markets are likely to remain volatile, but we expect a gradual recovery, with Nifty potentially retracing towards 23,800, which represents the 23.6% retracement of the entire decline. Momentum indicators and oscillators have entered extremely oversold territory, indicating the possibility of a pullback,” he said.
The broader structure remains weak, and any pullback is likely to attract selling pressure, he warned, adding that though the volatility index, INDIAVIX, cooled off by around 5%, it continues to remain elevated above 21. A correction below 18 will be required for bulls to regain control, he opined.
The broader market structure remains weak, and any pullback is likely to attract selling pressure, he warned. Although the volatility gauge India VIX cooled by around 5%, it continues to remain elevated above 21. A decline below the 18 mark will be necessary for bulls to regain control, he added.
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(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
