Sensex settles 400 pts higher from day's low, Nifty ends above 26,000: 3 key reasons behind market paring gains

Bank shares extend rise to 3rd straight day on December 15.

The equity benchmark indices Sensex and Nifty settled marginally lower on Monday, however, pared early losses, supported by value buying in select sectors such as consumer durables, FMCG and IT.

The Sensex dipped 54.30 points or 0.06 percent to 85,213.36. During the day, the benchmark declined 427.34 points or 0.5 percent to 84,840.32. The Nifty edged lower by 19.65 points or 0.08 percent to 26,027.30.

Here are three key reasons behind the rebound

1) Value buying: Investors stepped in to buy stocks at lower levels after the initial decline, particularly in Bank Nifty, consumer durables, FMCG and IT shares. The early weakness was in line with a subdued trend in global markets, continued foreign fund outflows and uncertainty surrounding an India-US trade deal. Buying interest emerged as valuations turned attractive.

2) Firm cues from US markets: US futures were trading higher by up to 0.3 percent, indicating a positive opening for Wall Street. This helped improve sentiment in domestic equities.

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3) Buying interest in FMCG stocks: FMCG shares rebounded after declining in the previous session. The sector has seen buying interest in only two of the past five trading sessions, supporting gains on Monday. Britannia Industries and Marico were among the top gainers in the Nifty FMCG index, rising up to 2 percent.

Technical analysis

Rupak De, Senior Technical Analyst at LKP Securities, noted "The index faced resistance near 26,050 before closing slightly lower. On the hourly chart, the index encountered resistance at the falling trendline. The hourly RSI has witnessed a bearish crossover and is trending lower, indicating bearishness in the market. Overall, the index is likely to remain range-bound between 25,900 and 26,100. A decisive move beyond this range could trigger a directional move."

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