Sensex, Nifty rebound: What's fueling the recovery and what investors should watch next

Indian equity benchmarks staged a sharp recovery on Wednesday, snapping a two-session losing run, led by gains in automobile, FMCG, media and realty stocks, even as IT and metal counters remained under pressure.

The 30-share BSE Sensex pack advanced 443.97 points or 0.58 per cent to close at 76,922.64, while the NSE Nifty50 index rose 140.10 points or 0.59 per cent to settle at 24,005.85.

The broader indices also ended in the green, with Nifty Midcap100 rising 0.34 per cent and Nifty Smallcap100 climbing 0.36 per cent.

Among the key contributors to the Sensex's rise were Eternal Ltd, Reliance Industries Ltd (RIL), State Bank of India (SBI), Axis Bank Ltd, Hindustan Unilever Ltd (HUL), Bharti Airtel Ltd, Kotak Mahindra Bank Ltd, Mahindra & Mahindra Ltd (M&M), Maruti Suzuki India Ltd and Asian Paints Ltd.

The upmove added to investor wealth, with BSE-listed companies' market capitalisation (m-cap) increasing by around Rs 2.38 lakh crore to Rs 476.48 lakh crore from Rs 474.09 lakh crore in the previous session.

Vinod Nair, Head of Research at Geojit Investments, said, "The domestic markets entered H2 CY26 on an optimistic footing as multiple headwinds began to abate, with the anticipated US-India trade agreement, easing West Asia tensions, and benign oil prices emerging as the key drivers of positive sentiment. The recovery was broad-based, with an outperformance of large caps due to a favourable valuation and an expectation of a partial reversal of FPI sentiment after the last two years of outflows. While near-term sentiment remains constructive, markets are likely to stay data-dependent, with investors balancing improving domestic fundamentals against evolving global macroeconomic and geopolitical developments."

Ajit Mishra – SVP (Research) at Religare Broking, stated, "The positive undertone was supported by encouraging June auto sales data, which boosted sentiment across the automobile space, while the continued decline in Brent crude prices towards the $71 per barrel mark provided further relief on inflationary concerns. However, gains remained measured due to lingering uncertainty surrounding the progress of the US-Iran peace negotiations and concerns over the domestic monsoon, as June rainfall remained below normal, raising questions about the agricultural outlook.

Meanwhile, he asserted, "We maintain our negative stance on IT due to its continued weakness." 

Ankur Punj, MD & Business Head at Equirus Wealth, noted, "Despite the prevailing global uncertainty and geopolitical tensions, strong vehicle sales numbers show the resilience of the domestic growth story. With crude oil prices declining further, inflationary pressures have ebbed for now in consumption-related sectors. Also, the revival in monsoon over the past few days and hopes of a revival in peace talks between the US and Iran may aid sentiment."

Nifty outlook

Rupak De, Senior Technical Analyst at LKP Securities, said, "Nifty50 remained range-bound as the index failed to break out of its recent trading band. Over the past few sessions, it has been hovering around the 24,000 mark, indicating a lack of directional momentum. Despite the sideways movement, the short-term trend remains positive, with the index showing resilience throughout the session. However, momentum continues to be subdued. Going forward, the bullish bias is likely to remain intact as long as the Nifty holds above the key 23,800 support level. On the higher side, the index may continue its slow but steady upward trajectory, with the potential to move towards 24,200 and higher over the near term."