Sensex, Nifty snap 4-session losing run; can markets sustain recovery amid caution?

Indian equity benchmarks staged a rebound on Monday, pausing their four-session losing streak. The 30-share BSE Sensex pack climbed 472.77 points or 0.66 per cent to close at 72,382.47, while the NSE Nifty50 index rose 133.80 points or 0.60 per cent to end at 22,555.75.

On the sectoral front, FMCG, energy and banking led the recovery, supported by strength in select counters. Pharma and IT lagged after their recent phase of relative outperformance.

Gains in PSU banks and select lenders helped Nifty Bank outperform for much of the session, while weakness in HDFC Bank restricted the sub-index's advance.

The broader market also participated in the recovery, with both midcap and smallcap indices gaining around half a per cent each.

Ajit Mishra, SVP (Research) at Religare Broking, said, "Global cues turned relatively supportive as crude oil prices eased from recent highs, with Brent hovering around $102 a barrel, providing some relief on the inflation front. Softer-than-expected US jobs data also reduced expectations of aggressive monetary tightening by the US Federal Reserve, supporting risk appetite across emerging markets. However, the US 10-year Treasury yield remains elevated, while the rupee continues to hover above the 96 per dollar mark. Persistent foreign selling also remains a key overhang."

Vinod Nair, Head of Research at Geojit Investments, stated, "Markets staged a recovery, supported by softer-than-expected US jobs data and a moderation in crude oil prices, providing some relief to investors assessing the near-term interest rate outlook. However, the disconnect between underlying economic growth and market performance has led participants to increasingly price in elevated crude oil prices, higher bond yields, and currency-related risks."

Nair added, "Attention is now shifting to the RBI policy decision and the upcoming earnings season, with a 25 basis points (bps) rate hike already largely priced into market expectations. The market is nearing an important juncture and a rebound is likely. However, the current risk-off sentiment may tempt investors to book profits until a fresh catalyst emerges."

Following a volatile trading session, Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, noted, "Investors remained cautious ahead of Wednesday's RBI decision, where the policy stance, liquidity guidance and inflation projections may matter as much as the rate action itself."

Nifty outlook

Sudeep Shah, Vice-President - Technical and Derivatives Research at SBI Securities, said, "Going forward, the 22,400–22,380 zone could act as immediate support. A decisive breach below this zone could revive selling pressure towards 22,220, which coincides with the October 1 low. On the upside, 22,700–22,720 could act as an immediate hurdle. A sustained move above this zone could trigger a relief rally towards 22,850. However, the broader structure remains weak until sustained buying traction emerges."