Sensex, Nifty extend gains: Will the market recovery sustain further?

Indian equity benchmarks continued their upward momentum for a second straight session on Tuesday. The 30-share BSE Sensex pack jumped 567.99 points or 0.75 per cent to close at 76,070.84, while the NSE Nifty50 index rose 172.35 points or 0.74 per cent to settle at 23,581.15.

The rally added nearly Rs 2.7 lakh crore to investors' wealth in a single session. The overall market capitalisation (m-cap) of BSE-listed companies increased by Rs 2.69 lakh crore to Rs 433.27 lakh crore from Rs 430.57 lakh crore in the previous session.

Gains in heavyweight stocks such as ICICI Bank Ltd, Bharti Airtel Ltd, Larsen & Toubro (L&T), Eternal Ltd, Mahindra & Mahindra (M&M), Tata Steel, HDFC Bank Ltd, Bharat Electronics Ltd (BEL), Axis Bank Ltd and Maruti Suzuki India Ltd (MSIL) supported the benchmarks.

Sectoral participation remained broadly positive. Automobile, metals, banking, financial services, consumer durables, chemicals and realty stocks saw buying interest, while IT and FMCG stocks ended lower. The broader market also remained firm, with the Nifty Midcap 100 index rising 1.02 per cent and the Nifty Smallcap 100 gaining 0.65 per cent.

Kranthi Bathini, Equity Strategist at WealthMills Securities, said, "The market is extremely volatile at present, with Nifty expiry day further contributing to the heightened activity." He added that the uptick in domestic benchmarks is largely driven by short covering following a recent sharp sell-off.

Ravi Singh, Chief Research Officer at Mastertrust, also highlighted the highly volatile nature of domestic benchmarks, suggesting a possible resumption of the correction, with Sensex potentially slipping to 75,200 level.

Amid the ongoing uncertainty, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, advised investors to remain invested and continue with SIPs. He added that the rebound in domestic benchmarks is unlikely to sustain, given the massive FII selling, which stood at Rs 9,366 crore yesterday.

"In the near term, this FII selling is likely to continue, as other markets such as South Korea and Taiwan are offering better returns to foreign investors. More importantly, the earnings growth prospects in these markets appear stronger compared to India. In brief, sustained FII selling is expected to weigh on markets in the near term," he stated.