Sensex, Nifty snap three-day losing run; market recovery to continue?

The benchmark indices rallied on Thursday, snapping three sessions of losing streak on value buying and Federal Reserve's 25 bps rate cut. Sensex jumped 427 pts to 84,818, while the broader Nifty closed 140 points higher at 25,898. Investor wealth rose by Rs 3.66 lakh crore to Rs 466.63 lakh crore on BSE today against Rs 463 lakh crore on Wednesday. 

Eternal, Tata Steel, Kotak Bank, Ultratech Cement, Maruti and Sun Pharma were the top gainers on Sensex, rising up to 2.74%. 

Of 30 Sensex stocks, 22 ended in the green. 

Midcaps and smallcaps shares ended in the green in the current session. On BSE, the midcap index rose 361 pts to 45,951 and the small-cap index climbed 257 pts to 50,563. 

On a sectoral basis, auto, banking and capital goods indices were the top gainers on BSE ,rising  up to 658 pts, 338 pts and  364 pts, respectively in the current session. BSE oil and gas index was the sole loser among 19 BSE sectoral indices falling 37 pts to 27,641. 

Ajit Mishra – SVP, Research, Religare Broking said, "A sustained move above the first key hurdle—the 20-DEMA around 25,950—is essential to confirm further recovery; failure to do so could trigger renewed profit-taking. Participants should closely track the performance of banking and IT, which will be crucial for market direction. Global cues, especially from the US markets, will also remain influential. Traders should position selectively with a strong emphasis on risk management."

Of the 4,341 actively traded BSE stocks, 2,448 closed higher, 1741 declined, and 152 remained unchanged. During the session, 85 stocks touched their 52-week highs, while 166 fell to their 52-week lows. Meanwhile, 206 scrips hit their upper circuits, and 138 were locked in lower circuits.

Nandish Shah - Deputy Vice President, HDFC Securities said, "Over the past three sessions, Nifty has been consistently testing and attempting to hold the 50-DEMA, currently placed at 25,735, indicating a phase of consolidation around this key support zone. A decisive move below 25,735 could trigger further downside towards the next support levels at 25,663 and 25,450. On the upside, the 20-DEMA at 25,956 is likely to act as immediate resistance, while 26,202 remains a positional hurdle for the bulls."

Shrikant Chouhan, Head Equity Research, Kotak Securities said, "We believe that 25,850/84500 and 25,700/84150 would act as key support zones. As long as the market is trading above these levels, the uptrend formation is likely to continue. On the higher side, 25,950/85000 would act as an immediate resistance area for the bulls. A successful breakout above 25,950/85000 could push the market up to 26,000–26,075/85300-85500.On the flip  side, below 25700 /84150 uptrend would become vulnerable."

Despite the market rally today, rupee also fell to a record low today. The rupee slipped 60 paise to a fresh low of 90.47 against the US dollar. Analysts attribute high demand for dollar, FII selling and a delay in the India-US trade deal for the rupee crash.

In an interview to Business Today, Gaurang Shah, Sr. VP, Geojit Investments said, "Historically, we always speak about December as a month when FIIs want to go for their Christmas vacation and they need to liquidate and pay back their dividends to their clients and for themselves in terms of bonus. This Christmas party has started earlier than expected for our Indian market in terms of sell-off getting intensified by the FIIs."

Previous session 

On Wednesday, Sensex declined 275.01 points, or 0.32% to close at 84,391.27, while Nifty lost 81.65 points, or 0.32%, to settle at 25,758. In the previous three sessions, Indian equity markets witnessed a severe correction. Investor wealth worth Rs 8 lakh crore was wiped out from the BSE market capitalisation during the period. This marks a significant slide from the record valuation of Rs 471 lakh crore to Rs 463 lakh crore in the last session.