Sensex, Nifty recovery rally: Investor wealth swells by Rs 4 lakh crore; consolidation ahead, say analysts

Investors gained nearly Rs 4 lakh crore on Wednesday as market saw value buying post correction in the previous session. Market cap of BSE-listed firms rose to Rs 434.97 lakh crore in the current session against Rs 431.10 lakh crore in the previous session. Sensex rose 182 points to close at 81,330 and Nifty index gained 88 points to settle at 24,666. 

The market saw a recovery today led by positive domestic and global cues. 

In India, retail inflation for April came in lower than anticipated at 3.16%, marking its lowest point in six years. This development sets a favorable backdrop for a potential rate cut during the RBI’s upcoming meeting in June. In the US, inflation figures also exceeded expectations for April, easing fears of stagflation and contributing to a significant overnight rally in US stock indices. 

Capital goods, metal and IT stocks were the top gainers on a sectoral basis. BSE capital goods (985 pts), IT (501 pts) and metal indices (735 pts) were the top index gainers. 

Banking stocks were the sole losers with BSE bankex falling 210 pts to 62,371. 

Prashanth Tapse, Senior VP (Research), Mehta Equities said, "Markets were choppy in intra-day trades but managed to end in the green on selective buying support as investors don't want to rush into equities after Monday's strong optimism. While foreign fund flows in the domestic market will be critical going ahead, investors are worried that US-China settling tariff disputes could revive foreign investors' interest in Chinese markets again."

Tata Steel (3.88%), Eternal (2.18%), Tech Mahindra (2.02%), M&M (1.56%), Maruti Suzuki (1.5%), Infosys (1.5%) and IndusInd Bank (1.45%) were the top gainers on Sensex. 

BSE mid cap and small cap indices climbed 520 points and 802 points, respectively. 

Some analysts are mildly bullish on the market outlook with some hinting an indication of consolidation in the near term. 

Ajit Mishra – SVP, Research, Religare Broking said, "Traders should maintain a stock-specific approach and use this consolidation phase to accumulate fundamentally strong names. Alongside key sectors, themes such as defence, railways, and PSU banking are also offering trading opportunities. However, it's important to maintain a balanced view and avoid excessive exposure."

Rupak De, Senior Technical Analyst at LKP Securities said, "The Nifty traded within a narrow range today, following two days of high volatile moves. The short-term trend remains positive, as the index continues to remain above critical moving average. After a sharp rally, this sideways movement appears to be a healthy consolidation, suggesting the market is catching its breath before the next move. As long as the index stays above the crucial support level of 24,400, the bulls are likely to maintain their grip. In the near term, the index might move towards the 24,850–25,000 range. However, a drop below 24,400 could delay this upward trajectory and lead to further consolidation."

Nandish Shah, Senior Derivative & Technical Research Analyst, HDFC Securities said, "During the session, Nifty breached the previous day’s low of 24,547 but managed to hold its level above 5 days SMA, currently placed near 24,500. Bullish trend is well intact for Nifty as it has been holding its level above all key moving averages. On the downside, strong supports for Nifty are placed at 24,500 and 24,378, while on the upsides 24,850 and 24,975 could offer resistance."

Previous session 

The 30-share BSE Sensex plunged 1,282 points or 1.55 per cent to close at Rs 81,148 and the broader NSE Nifty index lost 346 points or 1.39 per cent to settle at 24,578.