Sensex, Nifty extend early gains ahead of Fed outcome; mid-, small-cap indices rise over 2%

Despite this rebound, both the Sensex and Nifty are down 12 percent from their record highs of September 2024.

The Sensex and Nifty extended morning gains and were up over half a percent around noon of November 29, fueled by IT stocks rallying ahead of the U.S. Federal Reserve's policy cues. While most sectors basked in the green, Nifty FMCG bucked the trend, slipping nearly 1 percent. Financial services, IT, and auto stocks spearheaded the gains in the Nifty 50.

Despite this rebound, both the Sensex and Nifty are down 12 percent from their record highs of September 2024. Meanwhile, the Nifty Midcap index down 9.1 percent year-to-date and the Nifty Smallcap index sinking 14.71 percent.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "Valuations are reverting to mean. This trend will make the market healthy and is likely to continue. Correction in the overvalued broader market is desirable."

As of 11:27 AM, the Sensex was up 302 points or 0.4 percent at 76,203, while the Nifty gained 106 points or 0.5 percent to trade at 23,064. Market breadth favoured bulls, with 2,690 stocks advancing against 659 decliners, while 123 remained unchanged.

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Today, the broader markets followed suit with the benchmarks, with both the BSE Midcap and BSE Smallcap indices climbing by 2 percent.

Nifty Bank extended its 1.7 percent gain from the previous session, rising another 0.4 percent today, after the Reserve Bank of India (RBI) announced measures to inject liquidity into the banking system. These measures, including bond purchases and dollar/rupee swaps, are seen by analysts and traders as a potential precursor to a rate cut next month. The RBI's actions, expected to inject $17.39 billion into the system, follow months of a cash crunch that had driven up overnight and short-term lending rates.

The IT index gained 1.5 percent, taking cues from global tech stocks. In the U.S. market, stocks closed higher, led by a recovery in Nvidia and other AI-linked tech shares. The Nasdaq jumped 2 percent, while Nvidia rebounded 9 percent after its 17 percent drop erased $593 billion in market value—the largest single-session loss for any company. Apple shares also gained nearly 4 percent as investors anticipated quarterly results from Apple, Microsoft, and others later this week.

Sameet Chavan, Head of Research, Technical and Derivative at Angel One, said that on the levels front, 22,800 remains the critical support zone on an immediate basis. On the upside, he sees 23,100-23,150 as an intermediate hurdle, with strong resistance around 23,350-23,400, which if Nifty 50 breached could give a boost to the bullish sentiment in the markets.

"At present, the heightened volatility remains a significant concern, with small and mid-cap stocks being the primary victims. It is essential for traders to remain vigilant and assess potential strategies to navigate this landscape effectively," he added.

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