Sensex recovers 200 pts from day's low, Nifty ends above 25,900: Value buying, 5 other key factors behind market rebound

Ajanta Pharma shares rise amid strong buying. 

The equity benchmark indices Sensex and Nifty settled flat, recovering from early losses in Tuesday's trade as buying in metals and auto shares supported the domestic market.

Falling for the fifth consecutive day, the Sensex dipped 20.46 points or 0.02 percent to settle at 84,675.08. During the day, it hit a high of 84,806.99 and a low of 84,470.94, gyrating 336.05 points.

Ending the day on a flat note, the Nifty slipped 3.25 points or 0.01 per cent to 25,938.85.

Shriram Finance, Mahindra & Mahindra and Bajaj Auto were among the top gainers in the Nifty50 pack, rising up to 2 percent, while ETERNAL and Bajaj Finserv were among the major laggards, declining up to 1 percent.

Key factors behind market rise

1) Value buying: Value buying emerged after the Nifty declined for three consecutive sessions amid thin year-end volumes.

"A clear directional change will happen only early in the new year when large institutions are back in action. It would be better for investors to watch the market now and wait for new triggers and new directional moves. However, weakness in the market can be used to nibble at high-quality large caps," said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

2) Auto, metal stocks in focus: Auto shares saw buying interest ahead of the release of monthly sales numbers, due in two days, which are expected to provide cues on the sustainability of consumption demand. The Nifty Auto was up nearly 1 percent amid buying in the index.

Buying was also seen in metal shares after a brief decline in commodities on Monday. The Nifty Metal index was trading about 0.7 per cent higher.

"The auto sales numbers expected in two days will give an indication of the sustainability of the consumption boom in the economy. This is significant from the economic growth perspective too, Vijayakumar said.

Stock Market LIVE Updates

3) Positive global cues: In Asian markets, Hong Kong’s Hang Seng index and Japan’s Nikkei 225 were trading in positive territory. US futures were also in the green, indicating a positive opening for the US markets after they ended lower on Monday.

4) Rupee rises: The rupee rose 3 paise to 89.95 against US dollar in early trade on Tuesday buoyed by a weaker greenback and strong IIP numbers. However, FII outflows, marginally higher crude oil prices, and a weaker opening in the domestic equity markets capped sharp gains in the local unit, forex traders said. At the interbank foreign exchange, the rupee opened at 89.98 against the US dollar before rising to 89.95, up 3 paise from its previous close.

5) IIP Growth: India's industrial production grew at a two-year high of 6.7 percent in November this year, driven by strong performances in mining and manufacturing, mainly on account of order pile-up following a cut in GST rates. The factory output, measured in terms of the Index of Industrial Production (IIP), had expanded by 5 percent in November 2024.

6) Nifty expiry: Tuesday is also the weekly and monthly expiry of Nifty derivatives contracts. The expiry sessions often see higher volatility as participants roll over positions to the next series or square off existing positions, which can lead to sharp intraday movements in the index.

Technical outlook

Anand James, Chief Market Strategist at Geojit Investments, said the Nifty’s inability to sustain above the 26,050–26,077 zone has triggered a downward bias towards the 25,935–25,850 levels.

"However, we expect attempts to pull back early in the day, though we will wait for at least a push above 25,970–26,000 to play such upswings," he said.

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