Sensex, Nifty today: Stock market recovers after Monday selloff; here's why

Benchmark indices Sensex and Nifty recovered partially on Tuesday, as investors judged the panic selloff in the previous session over HMPV concerns was unwarranted. The BSE barometer Sensex rose 397.74 points, or 0.51 per cent, to hit 78,362.73. The NSE benchmark Nifty stood at 23,781.10, up 165.05 points or 0.7 per cent. The broader market breadth was firm, with three stocks rising for every single that fell.

The 1.6 per cent cut in Nifty yesterday was an overreaction to the HMPV virus concerns, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. He noted that the FPI selling of Rs 2,575 crore for the day was overwhelmed by the DII buying of Rs 5,750 crore.

"The correction was triggered by short selling by bears trying to exploit the negative sentiment. The resilience of the pharma and healthcare stocks also indicated the influence of the virus concerns in the market. The fact that momentum stocks were on the back foot yesterday indicates lack of confidence by the bulls in the context of negative sentiment," he said.

Vijayakumar said the clarification by the government that there is no room for undue concern from the virus, which is not new, can facilitate a rebound in the market, led by momentum stocks. He advised investors to use any dip to buy fundamentally strong beaten-down stocks in automobiles and financials.

Titan Company Ltd shares climbed 3 per cent to Rs 3,574.65. Titan reported jewelry sales growth of 26 per cent YoY (ex-bullion) in Q3 against MOFSL's estimate of 24 per cent. It added a total of 69 stores for the quarter. MOFSL retained its 'Buy' on the stock with a target of Rs 3,850.

Another jeweller Kalyan Jewellers India Ltd saw its shares climbing 5 per cent said its consolidated revenue grew 39 per cent year-on-year (YoY) in the December quarter, and suggested opening of 24 new stores for the quarter.

Adani Ports, Asian Paints, IndusInd Bank and Reliance Industries Ltd gained 1.3-1.6 per cent. Tata Motors Ltd, ICICI Bank Ltd, Power Grid, Tata Steel and UltraTech Cement also gained over 1 per cent each.

Monday's fall had seriously weakened the entire recovery from the December 31 lows of 23,460. The Nifty bulls needs to protect 23,500 if they are to have any chance of a rebound, said Akshay Chinchalkar, Head of Research at Axis Securities.

"The bears have the upper hand till 24,060 remains intact, but more immediate resistance lies near 23,800. On the other hand, a break below 23,500 will again bring the focus back on the November lows near 23,260. Options analytics show that although demand for OTM puts rose more than that for similar-distance calls yesterday, it was not as high as the day prior, which means declines, if any, will likely be bought, Chinchalkar said.