Sensex, Nifty trim gains but settle higher; what's next for the market?

Indian equity benchmarks ended higher on Thursday, recovering from the previous session's sharp decline, although late profit booking capped gains. The 30-share BSE Sensex pack rose 238.22 points or 0.31 per cent to settle at 76,741.82, while the NSE Nifty50 index climbed 80.75 points or 0.34 per cent to close at 23,962.80.

Sectoral participation remained broadly positive, with realty, banking and pharma stocks leading the gains, while auto and IT counters traded on a subdued note. The broader market outperformed the frontline indices, with the BSE midcap and smallcap indices advancing 1.38 per cent and 1.80 per cent, respectively, indicating improved market breadth and renewed buying interest.

Among the top contributors to Sensex's advance were Bharti Airtel Ltd, HDFC Bank Ltd, Sun Pharmaceutical Industries Ltd, Kotak Mahindra Bank Ltd, Eternal, Reliance Industries Ltd (RIL), InterGlobe Aviation Ltd (IndiGo's parent), Bajaj Finserv Ltd and UltraTech Cement Ltd.

Ankur Punj, MD & Business Head at Equirus Wealth, said, "Markets ended higher after yesterday's slump, although gains were muted amid profit-taking towards the closing hours." He added that traders will watch the volatility in global crude oil prices and local currency movement, especially after the US decided to end the ceasefire with Iran.

Ajit Mishra, SVP, Research at Religare Broking, also highlighted the late-session profit booking that pared some of the gains.

"The recovery was primarily supported by easing concerns over the Middle East after indications that Iran was willing to resume negotiations, which helped cool crude oil prices from their recent highs. Continued foreign institutional buying and a decline in the India VIX further supported sentiment. However, lingering geopolitical uncertainty and caution ahead of the earnings season prevented participants from turning aggressively bullish," he stated.

"Given the prevailing market setup, we recommend maintaining a cautious stance on the index and focusing on relatively stronger sectors such as pharma, realty, and select banking names for long positions, while adhering to disciplined risk management," Mishra further stated.

Nifty outlook

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said, "The underlying short-term trend of Nifty50 remains choppy with a weak bias. But there is an indication of a bounce back from the 23,800 support level over the short term. Further sustainable upside above 24,200-24,300 levels is likely to bring more short covering in the market."