Markets rally 1.2%: Sensex 350 pts away from all-time high, Nifty 65 pts; here's when fresh highs are possible

Markets rally 1.1%: Sensex 400 pts away from all-time high, Nifty 75 pts; here's when fresh highs are possible

After a broad-based buying spree on November 26, Indian benchmark indices Sensex and Nifty are within touching distance of their all-time highs. The 1.2% rally on the markets was the biggest single-day jump in five months.

Amid optimism over rate cut by Federal Reserve next month and RBI Governor's dovish comments, Indian markets have stormed past the resistance and could further notch new highs, said analysts.

When seen from day's high, Sensex is currently 350 points away from reclaiming its all-time high while Nifty needs to climb another 65 points. Today, Sensex rallied over 1,000 points while Nifty reclaimed the psychologically important 26,200-mark.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart said today's rally provides comfort in the fact that all sectors have participated in it and that such secular rallies would improve investor sentiment.

"Indian equity markets witnessed a strong bounce in early trade, taking positive cues from global markets. Benchmarks moved higher after three consecutive sessions of decline, offering some relief to investors and traders. One of the key drivers behind today’s rally is the strength in global markets. Asian indices traded firmly higher, while Wall Street ended on a positive note overnight. This improved global risk sentiment provided support to Indian equities and encouraged fresh buying at lower levels. Another important positive trigger is renewed optimism around a possible interest rate cut by the U.S. Federal Reserve. Recent softer US economic data has strengthened expectations that the Fed could begin easing monetary policy in the coming months. Lower interest rates in the US generally improve liquidity conditions and increase the attractiveness of emerging markets such as India, prompting risk-on sentiment across equities.

"The rally is also being supported by sector-specific buying, with gains seen across the board. Metal stocks and PSU banks are leading the move, supported by improving global commodity sentiment and selective value buying. Broader market participation indicates that the bounce is not limited to a single sector, lending strength to the overall market structure. Overall, the combination of strong global cues, easing rate concerns, and broad-based buying has helped the market stabilise after recent weakness," said Pravesh Gour, Senior Technical Analyst at Swastika Investmart.

Gour said Nifty could hit 26,500 in near term if it decisively crosses the all-time high of 26,277 and that 25,800 is the immediate support.

"From a technical perspective, Nifty 50 has witnessed a rebound after testing lower levels around 20-SMA. The index is currently trading above its short-term moving averages (9-DMA and 20-DMA), indicating a short-term pullback rally. However, it is still hovering near a crucial resistance zone of 26,200–26,277, which coincides with the upper trendline and prior supply area. Sustaining above this level will be key for further upside toward 26,400–26,500 in the near term. On the downside, 25,800–25,750 remains an important immediate support, followed by a stronger base near 25,500, where the 50-day moving average is placed. Momentum indicators also supporting the trend Overall, the trend remains positive above key supports, but traders should adopt a buy-on-dips strategy until a decisive breakout above resistance confirms renewed strength," said Gour.

Another analyst said this rally has more legs and today's move is not just a temporary bounce.

"Today’s market rally was driven by monthly expiry short-covering, strong support from PSU banks and metal stocks, and positive global cues. FIIs sharply reduced short positions, adding momentum to the upside. Technical structures for both Nifty and Bank Nifty show higher highs and higher lows with rising EMAs, indicating sustained buying on dips. Option-chain support around 25,850–25,900 also provided a solid floor for Nifty. Improved global sentiment and renewed domestic sectoral strength made the move broader and healthier. Overall, the rally reflects a mix of short-covering, sector rotation, and supportive technicals, rather than just a temporary bounce," said Drumil Vithlani, Technical Analyst at Bonanza.

Meanwhile, Bank Nifty notched a fresh high of 59,553 on November 26 and is set for its best day after October 1 amid expectations of a rate cut by Reserve Bank of India early next month.

Lower interest rates make borrowing cheaper for business and consumer and lenders tend to benefit from stronger loan demand.

Axis Bank, which is up 1.9%, is the top gainer on Nifty Bank index, while Union Bank of India is leading gains on Nifty PSU Bank index.

Another analyst said there will be bouts of volatility but the overall direction still looks positive.

"Markets are sitting just below their record highs, and a clear breakout will be largely dependent on two things: more certainty around global rate cuts and the start of the domestic earnings season. FII flows have steadied, domestic liquidity is strong, and that is helping to support sentiment. If Nifty manages a sustained close above the current resistance zone, new highs may not be far away. There will be bouts of volatility, but as long as the macro environment stays steady, the overall direction still looks positive," said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Pvt. Ltd.