Bulls return on D-St, lift Sensex up 800 points, Nifty above 24,100; key factors why markets jumped today

Since 2000, the IT gauge has climbed about 10% on average in the last quarter of the year, according to data compiled by Bloomberg.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Indian equity markets bounced back sharply on Friday, November 29, with benchmark indices Sensex and Nifty gaining 1 percent, as bulls regained control after the steep sell-off in the previous session. Strong buying interest from domestic investors, attractive valuations, and renewed confidence in India's growth story drove the rally, supported by gains across key sectors.

At 1.40 pm, BSE Sensex was up 789 points or 1 percent at 79,832, while the NSE Nifty rose 239 points to 24,153, reclaiming the 24,100 level. Market breadth was positive, with 1,904 shares advancing, 1,460 shares declining, and 100 shares unchanged.

Here are the key factors driving today’s market rally:

Attractive valuations after correction

The recent correction in Indian equities has made valuations more reasonable, encouraging selective buying. “After Indian equities' recent correction, the current market offers opportunities for stock selection as pockets of attractive valuation exist,” Ashish Ranawade, head of products of Emkay Wealth Management, said to Reuters.

The Nifty 50 and Sensex had declined by nearly 8 percent from their September highs. In early October, the Nifty’s price-to-earnings (P/E) ratio peaked at 25.8, well above its one-year average of 21.6. It has since moderated to 22.58 by the end of October and is now estimated at around 21x. “The markets are at good levels now after the recent correction,” Mahesh Patil, CIO at Aditya Birla Sun Life AMC, said in a TV interaction.

Domestic buying interest amid confidence in India’s growth story

Domestic institutions have likely stepped up buying, effectively countering foreign outflows. “There is a lot of renewed buying interest in markets, especially from domestic institutions. The structural undercurrent from domestic investors remains strong, offsetting FII selling,” said Nirav Karkera, Head of Research at Fisdom.

Also read | Active momentum funds gather steam as large fund houses enter the fray

Further, the Maharashtra state election results and a favourable domestic growth outlook have bolstered confidence in the government’s regime. “The outlook for Indian growth remains strong,” said Karkera, adding that India’s exclusion from adverse trade policies under the incoming US President Donald Trump administration has removed a significant overhang.

In the derivatives space, there is improved sentiment from new F&O entrants and short-covering in broader markets, which Karkera said fueled today’s rally in the benchmark indices too. “All these factors have been accumulating in support of the market sentiment,” he added.

Broad-based sectoral gains

Significant gains were seen in Pharma, Healthcare, IT, Auto, and Infra stocks today.

Auto and IT: After leading losses yesterday, these sectors rebounded, gaining around 0.8 percent each. M&M rose 1.97 percent, Maruti Suzuki added 1.10 percent, HCL Tech gained 1.14 percent, and TCS rose 0.73 percent.

Pharma and Healthcare: The Nifty Pharma index surged 2.29 percent, while Nifty Healthcare was up 2.06 percent. Sun Pharma (up 3.23 percent) and Cipla (up 3.25 percent) led the sectoral rally.

Positive contributors: Heavyweights Bharti Airtel (up 4.13 percent) and Reliance Industries (up 1.5 percent) were among the top contributors to the Nifty’s gains, lifting overall market sentiment.

Expectations of plateauing FII selling

Foreign institutional investor (FII) activity remains under watch, but expectations of a plateau in selling provided relief. Karkera said, “We expect FII selling to plateau soon, if not turn into buying. Most portfolio churns have already happened, and incremental selling may not be as high.”

Also read | QIP fund raising crosses Rs 1 lakh crore mark for first time in a calendar year

He added that domestic investors have so far proven strong enough to effectively counterbalance FII outflows, with systematic investment plan (SIP) inflows continuing to support the markets.

Market outlook

While today’s rally was driven by domestic buying, improved valuations, and short-covering, experts warn of continued volatility. “The bouts of profit-taking and speculative trading will persist, but the structural undercurrent remains strong,” said Karkera.

On the technical side, with the Nifty hovering around 24,100, the level to watch for the next hurdle remains at 24,350. “Immediate support is placed at 23,800 and 23,680, which align with strong Fibonacci levels. These zones could act as potential reversal points, offering a buying opportunity if confirmed by price action. On the upside, 24,350 serves as immediate resistance. A sustained move above this level could propel the index toward 24,800 and 25,000, unlocking significant upside potential,” said Mandar Bhojane, Technical Analyst at Choice Broking.

On the other hand, Nifty may also see a short term bounceback. Rohit Srivastava of Indiacharts.com cautioned against extrapolating yesterday’s sharp fall. “Maybe the correction is not fully over, but the Nifty could head toward 24,770 and 25,000 in a counter-trend bounce, he said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.