Sensex settles 200 pts higher from day’s low, Nifty ends above 26,150: Positive global cues among key factors behind market rebound

The equity benchmark indices Sensex and Nifty pared some early losses on Tuesday, however, settled lower amid profit-taking in IT and pharma shares.

Snapping the two-day gaining streak, the Sensex dipped 42.64 points or 0.05 percent to settle at 85,524.84. During the day, it hit a high of 85,704.93 and a low of 85,342.99. The Nifty closed marginally up by 4.75 points or 0.02 percent to 26,177.15.

Key factors behind market rebound

1) Positive global cues: Positive trends in overseas markets aided sentiment. In Asian trade, South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng were trading in the green. US markets ended higher on Monday.

2) Crude Declines: Lower crude oil prices also lent support to domestic equities. Brent crude, the global oil benchmark, slipped 0.08 percent to USD 62.02 per barrel. A softer crude price eases pressure on India’s import bill and inflation outlook, which is generally seen as positive for the economy and equity markets.

3) Decline in India Vix: Adding to the positive undertone was a decline in market volatility. The India VIX, which measures near-term volatility and is often referred to as the fear gauge, dropped 2.17 percent to 9.46. A lower VIX indicates reduced uncertainty and improves risk appetite among investors.

4) India-US trade talks: Investor focus remained on India-US trade talks. Commerce and Industry Minister Piyush Goyal on December 22 said India is in advanced discussions with the United States on a trade agreement. He made the remarks in New Delhi while briefing the media after the conclusion of the India-New Zealand free trade agreement. A breakthrough is awaited in the long-running negotiations.

5) Value Buying: Markets opened on a subdued note but soon found support as investors stepped in to buy select stocks after the early decline.

Technical Analysis

Anand James, Chief Market Strategist at Geojit Investments Limited, said the Nifty’s clean break beyond the declining trendline that had capped the market so far this month has improved the outlook.

"This strengthens our confidence towards expecting 26,300 and higher levels. Meanwhile, the downside marker has been pushed higher towards 26,100, a slippage past which could lead to sideways moves," he said.

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