After a 3% fall on Monday, market indices reversed the trend amid positive cues from European markets and closed sharply higher on Tuesday. Global markets were mixed as an additional US stimulus package capped losses after the new COVID-19 strain in the UK triggered a global selloff. Recovering from earlier losses in a volatile trading session, Sensex ended 452 points higher at 46,006 and Nifty gained 137 points to 13,466.
Key equity indices corrected sharply on Monday as Sensex and Nifty fell over 3% each. Reversing the trend from six days of consecutive gains amid concerns over fresh rounds of lockdown, Sensex fell 1,406 points to 45,553 and Nifty ended 432 points lower at 13,328.
HCL Tech, Infosys, TCS, Tech Mahindra, HDFC and Power Grid were among the top gainers today. On the other hand, M&M, followed by Bajaj Finance, ONGC, ITC, IndusInd Bank, Reliance Industries, Bajaj Finserv and Dr Reddy's Lab were among the top laggards in the Sensex pack.
The Nifty IT index, up 3% led the list of gainers in Tuesday's volatile session. Most IT stocks, including Mindtree, HCL Tech, Tech Mahindra, Infosys and TCS traded among the top gainers after global financial firm Goldman Sachs resumed coverage on the IT sector and said the third wave of the IT outsourcing cycle is ahead.
Nifty IT was followed by Nifty Pharma, which closed 2% higher, followed by a 1.3% rise in the metal index. All the sectoral indices closed in the green territory today.
Earlier, market indices were trading on a volatile note amid weak global equities as the new COVID-19 strain in the UK triggered a global selloff. Sensex fell 305 points to 45,250 and Nifty lost 95 points to 13,230 after opening marginally in the green.
Vinod Nair, Head of Research at Geojit Financial Services said,"Market took an unexpected positive momentum in the afternoon, during a see-saw trading day, following the positive opening of the European market, which recovered from yesterday's sell-off. The sectorial rally was led by IT and Pharma stocks with other sectors also supporting the up move. Volatility is expected to stay high in the near-term due to strict lockdown impacting economic recovery. However, the market is expected to remain bullish in the medium to long term, backed by overall progress in economic activity in 2021."
Domestic equities turned volatile following mixed trend from global markets. Asian markets opened lower on Tuesday as investors were worried following the discovery of a new COVID-19 strain in the U.K. that has prompted tighter lockdowns and travel restrictions across Europe, leading to a slower economic recovery.
In the US, markets closed slightly lower on Monday, after steep losses early in the session as optimism over the stimulus package deal reached yesterday was overshadowed by concerns over new coronavirus strain in the U.K
The trend in the domestic market, however, changed after European markets opened in the bullish zone as investors kept a close watch over the new strain of coronavirus. Markets turned slightly positive after German pharmaceutical company BioNTech said it was confident that its coronavirus vaccine would work against the new UK variant.
Kanika Agarrwal, Co-founder and Chief Investment Officer, Upside A said," On the global front, we got good news and bad news overnight - Good being that the democrats and republicans managed to finalize the latest stimulus package which will add $900bn to the US economy. The bad news is a new strain of the virus in the UK which appears to be more contagious than the existing one. Even so, the strain appears similar to the current one for which vaccine rollout is on at full speed. Therefore, the bad news seems to come with its own glimmer of hope. Nothing else has majorly changed. We continued to buy today, and will do so for the rest of the week. Today's markets are therefore a could serve as an entry point for those waiting for a correction. As Warren Buffett says, "be greedy when others are fearful."
On markets closing --Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said,"For the time being, the markets are directionless. Yesterday's fall has made traders nervous and since the volatility is high, the stops will be large too. It is therefore advised to wait and watch for a few days till a clear direction is confirmed. 13100-13150 is a medium term support for the Nifty and if that were to break, we could slide down to 12800."
Commenting on Nifty Technical outlook, Rohit Singre, Senior Technical Analyst at LKP Securities said, "After a strong fall in yesterday session, the index took a breather and managed to close a day on a positive note at 13466 with gains of one per cent and formed a hammer sort of candle pattern. Good recovery in today session has created a fresh base in index near 13200 zone until trading above said level we may see today's pullback to extend further towards its immediate resistance zone of 13600 in coming sessions."
Ashis Biswas, Head of Technical Research, CapitalVia Global Research Limited- Investment Advisor said, "The Market witnessed some lackluster movement after the recent correction. Nifty 50 Index is still holding above the support level of 13100, Our research suggests trading above 13100 is key to keep the long-term positive trend intact. Any move below 13100 levels, we expect the correction to gain momentum, which could lead to a downside projection till 12900-12910 level. The momentum indicators like RSI, MACD to recover after staying neutral to bearish in recent time."
S Ranganathan, Head of Research at LKP Securities said, "Buoyed by Global Cues, the Bulls were back in afternoon trade as IT stocks led the charge well supported by Pharma stocks. Given the spirited pull back rally seen today, it would be interesting to see how the tussle pans out tomorrow to gauge the broader market breadth."
On the currency front, The rupee pared most of its initial losses and settled for the day 5 paise lower at 73.84 (provisional) against the US dollar on Tuesday, tracking a rebound in domestic equities.