Sensex, Nifty snap three-day losing streak: Key risks for bulls' comeback on Dalal Street

Benchmark stock indices Sensex and Nifty snapped three days of losing streak on Wednesday on the back of buying in blue-chips HDFC Bank and ICICI Bank and a firm trend in Asian peers. Sensex jumped 410.19 points or 0.51 per cent to close at 81,596.63. During the day, the 30 stock index surged 835.2 points or 1.02 per cent to 82,021.64.

The NSE Nifty climbed 129.55 points or 0.52 per cent to 24,813.45.

Investors gained Rs 2.89 lakh crore as market cap of BSE-listed firms rose to Rs 441.09 lakh crore against Rs 438.20 lakh crore in the previous session. 

However, the road ahead for the market does not seems free of breakers. 

Investors await the tariff solution between the US and other major economies, including India. They are  also wary of the possibilities of a war between Israel and Iran. A steady rise in coronavirus cases in few of the southeast Asian countries can also make investors sit on the fences in the days ahead.

Bajaj FinServ, Tata Steel, Sun Pharma, Tech Mahindra, Bajaj Finance, Nestle India and Tata Motors were the top Sensex gainers, rising up to 2.02%. 

IndusInd Bank, Kotak Bank, Power Grid and ITC were the top Sensex losers falling up to 1.39%.     

Market breadth was positive with 2291 stocks ending higher against 1685 stocks falling on BSE. 139 shares were unchanged. 

Commenting on the Nifty outlook, Aditya Gaggar, Director of Progressive Shares said, "Technically, the Index has formed a bullish harami candlestick pattern near its trendline support, supported by a hidden bullish divergence in the RSI—indicating potential for upward movement. For the uptrend to resume convincingly, the Index must break through the strong resistance zone of 24,950-25,000, while 24,675 remains a critical immediate support level on the downside."

Ajit Mishra – SVP, Research, Religare Broking said, "The recent price action in the Nifty indicates that the bulls are making a strong effort to sustain the prevailing uptrend. Participants are advised to align their positions accordingly, focusing more on stock selection based on relative strength. Dips should be seen as an opportunity to gradually accumulate quality stocks. Among key sectors, pharma, realty, metals, and banking are preferred, while a selective approach is recommended for the rest."

Rupak De, Senior Technical Analyst at LKP Securities said, "The Nifty remained confined within the range of the previous session, suggesting that traders are staying on the sidelines awaiting a clear signal. A fall below 24,700 could trigger a market correction, potentially leading to a decline toward the 21-EMA, which is currently positioned around 24,428. Overall, sentiment is likely to remain sideways to bearish as long as the Nifty stays below 25,000. However, if the Nifty reclaims the 25,000 level, the sentiment may turn bullish, and short bets would lose their appeal."

Foreign institutional investors (FIIs) sold shares worth a net Rs 10,016 crore on Tuesday, according to data available with the BSE. DIIs also parted with shares worth Rs 6738.309 crore. 

Previous session 

Sensex slipped 873 pts to 81,186 and Nifty closed 194 points lower at 37,283. Market cap of the BSE-listed firms slipped to Rs 438.20 lakh crore against the market cap of Rs 443.67 lakh crore on Monday.