Sensex, Nifty rally after six-session slump; banking, oil stocks surge, metals falter

In broader market action, BSE Midcap and Smallcap indices outperformed, gaining 2 percent and 2.5 percent, respectively.

After a punishing six-session losing streak, the Sensex and Nifty roared back to life, closing higher as banking, oil & gas, and auto sectors led the charge. Meanwhile, the metal sector struggled to shake off the pressure and ended in the red on October 8.

At close, the Sensex was up 584 points or 0.7 percent at 81,634 and the Nifty was up 239 points or nearly 1 percent at 25,035. About 2,884 shares advanced, 895 shares declined, and 94 shares unchanged.

"We've seen relentless foreign institutional investor (FII) selling over the last six sessions, but it had to ease eventually, and today seems to be that turning point," Narendra Solanki, Head of Fundamental Research-Investment Services told Moneycontrol. 

Domestic market sentiment is also being influenced by the anticipation of September quarter earnings and the outcome of the RBI's policy meeting on October 9. "The market could be experiencing short-covering ahead of the policy news. I also think FIIs may have exhausted their selling. These factors are helping the market bounce back," Solanki said.

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Some analysts also highlighted the Haryana assembly elections, noting that the Bharatiya Janata Party's (BJP) return to power for a third term could have an impact on market sentiment in the short term.

"While the recovery in key heavyweights could drive Nifty further upward, sustaining this momentum may be challenging," said Ajit Mishra – SVP of Research at Religare Broking. Mishra said that the Nifty faces an immediate resistance zone around 25,150-25,300, with a significant hurdle still at 25,500.

In broader market action, BSE Midcap and Smallcap indices outperformed, gaining 2 percent and 2.5 percent, respectively.

Among sectoral indices, the Nifty Metal index stood as the lone underperformer, slipping 0.8 percent after after China's state planner unveiled an economic roadmap lacking fresh stimulus, dampening investor expectations. A sharp decline in SGX iron ore prices also weighed on steelmakers. Tata Steel, JSW Steel, and Hindalco were the major laggards in the Nifty Metal index.

Oil & gas stocks rallied, with Reliance Industries, ONGC, and Oil India rising as Brent crude prices edged back to $80 per barrel. Nifty Auto gained nearly 2 percent after having declined for the past three sessions.

Also Read | BJP likely win in Haryana, Hang Seng crash, and more: Five factors behind today's rise in Sensex, Nifty

Meanwhile, Nifty Bank soared over 1 percent, snapping a six-day losing streak, boosted by strong performances from HDFC Bank, SBI, and Kotak Mahindra.

On the Nifty 50, Trent, Bharat Electronics, Adani Enterprises, Adani Ports, and M&M surged ahead, posting gains of 3-8 percent. In contrast, SBI Life, Tata Steel, Titan, Bajaj Finserv, and JSW Steel found themselves among the biggest losers, slipping 2-3 percent.

On the global front, the minutes from the Federal Reserve's September meeting, also set for release on October 9, will be closely watched for insights into future rate-cut strategies. On October 10, the consumer price index data will also be key as the data could impact the Fed's monetary policy decisions.

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