Sensex, Nifty extend recovery to second day as RIL, crude sensitive stocks fire up

The market breadth remained positive, meaning there were more gainers than laggards today.

Holding on to its recovery, the Sensex and Nifty 50 extended early gains to close the session on March 6 in the green territory, for the second straight day. The upmove was driven by solid gains in index heavyweight Reliance Industries, which got support for other crude sensitive stocks like Asian Paints and BPCL.

Crude oil prices tumbled after OPEC+ unveiled plans to gradually unwind its voluntary production cuts. The oil-producing alliance intends to restore 2.2 million barrels per day (mbpd) of supply over the next two years, accounting for 38 percent of the 5.9 mbpd cuts imposed since 2022.

In response, Brent crude slumped 6.5 percent over the past four sessions, hitting its lowest level since December 2021, while WTI dropped 5.8 percent, marking its weakest point since May 2023.

A fall in crude prices bode well with several rate-sensitive sectors, usually those dependent on the commodity as a key raw material. A fall in oi prices gives these companies to boost profits on the back of lower input costs. To that effect, names like Asian Paints and BPCL surged 3-5 percent, emerging as the top gainers on the Nifty.

Metal stocks also saw strong buying action, tracking a fall in the dollar index along with optimistic over China's stimulus package. The US dollar index fell to a four-month low, a move that went down well for emerging markets like India.

“If this trend continues, foreign institutional investor (FII) selling may subside, paving the way for further market gains,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

At close, the Sensex was up 609.86 points or 0.83 percent at 74,340.09, and the Nifty was up 207.40 points or 0.93 percent at 22,544.70. About 2,857 shares advanced, 979 declined, and 104 were unchanged.

On the sectoral front, the Nifty Metal index posted the strongest move, surging nearly 3 percent, closely followed by Nifty Energy and Nifty Oil and Gas, both of which rose over 2 percent. Other prominent sectoral gainers included Nifty FMCG, Nifty Media and Nifty Pharma that gained 1-2 percent.

Banking stocks also recovered from their initial fall, helping the Nifty Bank index reverse course and rise 0.3 percent. The recovery in financial stocks were banked upon the Reserve Bank of India's continued measures to inject liquidity in the banking system. The RBI announced open market purchases of government securities and USD/INR swaps amounting to Rs 1.9 lakh crore. This followed the central bank's decision on February 28 to conduct a $10 billion swap to boost long-term liquidity, which saw strong demand.

Among specific stocks, Reliance Industries surged nearly 3 percent while financial names like Shriram Finance and Bajaj Finserv also rose around 2 percent each. Tech Mahindra emerged as the major laggard with its over 2 percent decline.

The broader market also showcased strength as the BSE Smallcap index surged nearly 2 percent while the BSE Midcap rose nearly a percent.

Besides these, global markets also sent across positive cues as US President Donald Trump's decision to delay on tariffs for automakers for one month lit hopes of further negotiations. However, market experts also saw these expectations with a clouded lens. Vijayakumar highlighted the unpredictability of global trade dynamics, stating that the end game of Trump’s tariff policy remains unclear. "His latest exemption for Canadian and Mexican auto imports suggests he aims to negotiate from a position of strength. While deals and settlements are possible, they won’t come easily,” he said.

On the technical front, Anand James, Chief Market Strategist at Geojit Financial Services pegged the next resistance for Nifty at 22,513, but remains positive on the current market momentum to push the index towards 23,000. "However, volatility must remain contained above 22,270 for the uptrend to sustain. A break below 22,190 could challenge the upside view,” he added.

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