Sensex jumps 700 pts from day's low: Key factors behind markets snapping 8-day losing streak today

Sensex, Nifty settled higher on the back of value buying in blue-chip stocks HDFC Bank and Reliance Industries.

Sensex and Nifty ended their eight-day losing streak on Monday as fag-end buying helped markets recover from intraday losses, driven by value buying in blue-chip stocks.

Sensex climbed 57.65 points or 0.08 percent to close at 75,996.86. It had plunged 644.45 points or 0.84 percent to an intraday low of 75,294.76. The broader NSE Nifty rebounded 30.25 points or 0.13 percent to settle at 22,959.50. Bajaj Finserv, Power Grid, IndusInd Bank, Adani Ports, UltraTech Cement, HDFC Bank, Zomato and Tata Motors were among the top gainers, providing support to the indices.

Key Factors Behind Market Rebound

1) Value Buying: The investors picked up stocks at lower levels after a sharp correction in recent sessions. Heavyweights like HDFC Bank and Reliance Industries saw renewed buying interest, as analysts pointed out that valuations of large-cap stocks had dropped below their 10-year average, making them attractive for long-term investors.

2) Dollar Index Decline: A softer US dollar also supported market sentiment. While the greenback recovered from its intraday lows, it has declined from the 109.37 level seen in January. The US dollar index surged to a two-year high earlier this year on expectations that the Federal Reserve might slow the pace of interest rate cuts in 2025.

3) Technical Factors: Rupak De, Senior Technical Analyst at LKP Securities, noted that while the market staged a late recovery, overall sentiment remains weak. "The index rebounded sharply from the day’s low, indicating buying interest at lower levels. However, it still failed to reclaim key Fibonacci retracement levels and continues to trade below crucial moving averages, reinforcing a bearish outlook," he said. According to De, Nifty would need to close above 23,150 for any meaningful uptrend, while key support is placed at 22,800.

Ajit Mishra – SVP, Research, Religare Broking Ltd., noted that the resilience in key sectors viz. banking and IT combined oversold positions in other sectors are prompting intermediate recovery however lack of sustainability is keeping the traders on their toes.

Meanwhile, a mixed trend on the sectoral front kept the traders occupied wherein pharma, metal and energy were among the top gainers while IT and auto ended in the red. The broader indices also witnessed a similar trend wherein midcap managed to close with modest gains while smallcap closed flat.

Markets had been under pressure for the past eight trading sessions, with the Sensex losing 2,644.6 points or 3.36 per cent and the Nifty tumbling 810 points or 3.41 per cent until Friday.

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