Sensex, Nifty snap four-session losing run; tentative relief or more recovery ahead?

Indian equity benchmarks snapped their four-session losing streak on Monday, supported by buying at lower levels across select stocks. The 30-share BSE Sensex pack climbed 482.92 points or 0.66 per cent to settle at 73,606.75, while the NSE Nifty index climbed 153.20 points or 0.68 per cent to close at 22,753.20.

Sectoral performance remained mixed amid the ongoing earnings season. Metal, pharma and energy stocks rebounded, while banking and financial stocks remained subdued. Broader-market indices also recovered from their intraday lows and gained over 1 per cent each.

However, some market experts highlighted crude oil prices, geopolitical developments and global interest-rate expectations as key factors that could influence market sentiment in the coming sessions.

Ajit Mishra, SVP (Research) at Religare Broking, said, "Markets staged a recovery on Monday after a weak start, with benchmark indices rebounding from their intraday lows as buying emerged at lower levels. Nifty snapped its recent losing streak, offering some relief after four consecutive sessions of selling. However, the recovery remains tentative, with elevated crude oil prices, geopolitical uncertainty and concerns over the global interest-rate outlook continuing to weigh on sentiment."

Mishra noted that the overall market structure remained vulnerable following the sharp correction in midcap and smallcap stocks over the previous week.

"Among the key macro factors, Brent crude remained elevated near $115 per barrel, despite retreating from its recent high of around $117. Persistent tensions in West Asia, including attacks on Saudi infrastructure, have kept concerns over global energy supplies alive," he further stated.

Vinod Nair, Head of Research at Geojit Investments, said, "Indian equities recovered from early losses, supported by value buying and strength in metals, power and healthcare. However, elevated crude prices, geopolitical uncertainty and caution ahead of the Fed, ECB and BoJ policy decisions kept sentiment measured. Mid- and small-caps also witnessed some recovery after last week’s sharp correction, although investors remained selective, favouring earnings visibility and valuation comfort. Early-bird quarterly results suggest a commodity-led earnings boost in power generation, metals and refining, but high energy costs and interest rates are forecast to moderate overall corporate growth in the coming quarters."

Primary market offers support

The Reliance Industries Ltd (RIL)-backed Jio Platforms IPO, India's largest-ever public issue, closed last Friday, receiving 21.58 times subscription. Shares of Jio Platforms are scheduled to be listed on Wednesday, October 28.

That said, the primary market remains active this week, with five new mainboard IPOs set to collectively raise around Rs 2,580 crore from investors.

Ravi Singh, Chief Research Officer at Master Capital Services, said, "Retail investors are returning to equities as attractive IPO opportunities, hopes of listing gains and long-term growth prospects support participation. In September, they invested Rs 10,572 crore in the secondary market, the highest in three months, while primary-market purchases stood at Rs 5,650 crore."

Singh added, "Buying may continue selectively, supported by a strong IPO pipeline and domestic investor confidence. However, valuations, corporate earnings, crude oil prices, foreign investor outflows and global uncertainty could influence participation. Sustained buying will depend on market performance and whether investors continue finding attractive opportunities across both segments."

Can the market recover further?

Gautam Shah, Founder of Goldilocks Global Research, in an interaction with Business Today, said, "These long phases of consolidation are part and parcel of any bull market. Let's not forget that post-Covid, we had a wonderful three years during which Nifty almost moved up two-and-a-half to three times in value. So, consolidation was necessary. The good part is that I think most of the hard work is more or less done over the last two-and-a-half years."

Shah added, "Most of the negatives are already priced in. I still feel that 22,000–22,500 is a very important support zone and the lower end of the range. I think we can probably gradually turn around from here and move towards the upper end of the range, which is around 25,000–26,000. If that plays out, investors have an excellent opportunity right now, amid an environment of doom and gloom."