Sensex rises 398 pts, Nifty above 25,250; dead cat bounce or rally ahead?

Domestic equity benchmarks Sensex and Nifty snapped their three-day losing streak to settle higher on Thursday, tracking a rebound in global sentiment as US President Donald Trump dropped tariff threats and reached a framework for a future deal on Greenland.  

At close, the Sensex rose 397.74 points, or 0.49 per cent, to settle at 82,307.37. The Nifty climbed 132.40 points, or 0.53 per cent, to close at 25,289.90. 

Bharat Electronics (BEL) emerged as top gainer on the Sensex, rising 3.85% to Rs 418. Adani Ports followed with a 2.68% gain, while Tata Steel, SBI, Bajaj Finserv, and Asian Paints advanced 2.63%, 2.21%, 1.69% and 1.58%, respectively. 

Ponmudi R, CEO of Enrich Money, said that easing trade-related concerns and supportive Asian cues encouraged selective risk-taking, leading to broad-based participation across banking, auto, IT and metal stocks, with mid- and small-caps also joining the recovery. 

However, he cautioned that sentiment remained partially restrained due to continued weakness in the Indian rupee, reflecting sustained dollar demand.

Five stocks, namely State Bank of India (SBI), BEL, Tata Steel, Kotak Mahindra Bank and Larsen & Toubro, contributed heavily to the Sensex’s rise.    

According to Ponmudi, markets found comfort in the RBI’s approach to currency management. He said the central bank is ‘closely monitoring the pace of depreciation rather than defending any specific level’, which has reinforced confidence in a calibrated and orderly policy stance.  

Among sectoral indices, the BSE PSU Bank index gained 2.43% to close at 5,089.60, while the BSE Capital Goods rose 2.03% to settle at 63,102.40.

In the Sensex index, shares of ITC hit a fresh 52-week low of Rs 321.20 apiece.

Overall, of the 4,385 actively traded BSE stocks, 2,962 closed higher, 1,268 declined, and 155 remained unchanged. During the session, 69 stocks touched their 52-week highs, while 276 fell to 52-week lows. Meanwhile, 203 scrips hit their upper circuits, and 163 were locked in lower circuits.

Ponmudi said the 50-pack index continues to remain in a consolidation phase with a mild positive bias after a volatile intraday session. The index faced supply pressure near the 25,400–25,450 zone and corrected toward the 25,200 region, where buyers consistently emerged, confirming a strong intraday base.

“The afternoon recovery formed a sequence of higher lows, but upside momentum remains capped near 25,350–25,400, highlighting active selling on rallies. Importantly, Nifty has reclaimed and is sustaining above its 200-day EMA at 25,163, keeping the medium-term structure intact,” he said.

“As long as the index holds above 25,120, the broader setup remains stable with scope for a gradual push toward 25,400–25,500. A decisive close above 25,600 will be required to confirm a bullish breakout and shift momentum firmly in favour of the bulls. Failure to defend 25,120 may reopen downside pressure toward 25,100. Overall, the outlook remains range-bound to cautiously positive, favouring a buy-on-dips near supports and selling near resistance until a clear directional breakout emerges,” Ponmudi added.

Meanwhile, Vinod Nair, Head of Research at Geojit Investments Limited, said the domestic market saw a recovery in response to President Trump's encouraging comments about tariffs and Greenland during the Davos meeting. 

“Despite this, market sentiments remained cautious amid sustained rupee weakness and continued FII outflows. The initial set of corporate earnings did little to support current valuation levels. Nevertheless, investors have not ruled out the potential upside from a robust domestic demand environment, which could become more visible in the upcoming round of quarterly earnings announcements. Looking ahead, markets will closely monitor U.S. GDP growth and core inflation data later today, as well as the BoJ policy decision due tomorrow, for further cues," Nair said.