Bulls strike after 3 days: Sensex settles 900 pts higher, Nifty ends above 24,750; key factors behind market surge

Nifty outlook for March 6

• Sensex and Nifty rebound after three days of losses.
• Reliance, SBI, and HDFC Bank lead gains in Nifty pack.
• India VIX drops 10 percent, easing market volatility.

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The benchmark stock indices Sensex and Nifty rebounded by more than 1 percent on Thursday, in line with a rebound in global equities after recent sharp losses due to the conflict in West Asia. The two indices had fallen around 4 percent each in the previous three sessions.

Snapping its four-day decline, the Sensex rebounded 899.71 points or 1.14 percent to settle at 80,015.90. During the day, it surged 1,187.64 points or 1.5 percent to 80,303.83. The Nifty climbed 285.40 points or 1.17 percent to end at 24,765.90, ending its three-day falling streak.

Reliance Industries, State Bank of India and HDFC Bank were among the top gainers in the Nifty pack, rising up to 3 percent. On the other hand, Tata Consumer Products and Nestle India were among the laggards, declining up to 1 percent.

Key factors behind market rise

1) Value buying: Value buying emerged after the recent sell-off, with investors picking up stocks in sectors such as realty, metal, Oil and Gas and auto at lower levels. Buying was also seen in heavyweights, including Reliance Industries. Shares of Reliance Industries climbed about 3 percent after falling nearly 4.5 percent in the previous three sessions.

"From the market perspective, the problem with an ongoing war is that sudden developments like attacks on oil facilities can impact markets. If crude spikes, the market will be affected. On the other hand, a couple of days of smooth oil trade can trigger risk-on sentiment and facilitate a market rebound," said V K Vijayakumar, Chief Investment Strategist at Geojit Investments.

"It is important to note that India outperformed yesterday with only a 1.5 percent cut in the Nifty compared to the 12.1 percent crash in South Korea’s Kospi. Markets which did well this year like the South Korean market are facing huge volatility triggered by profit booking," he added.

According to Vijayakumar, volatility linked to news and events may continue in the near term.

"This will give opportunities to investors to slowly accumulate high-quality stocks and wait with patience. Perhaps emotional intelligence is more important now than financial acumen," he said.

2) Positive global cues: Asian markets also supported sentiment. South Korea’s Kospi rebounded sharply and jumped about 10 percent. Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng were also trading higher. US markets ended in positive territory on Wednesday.

The gains followed overnight strength on Wall Street after reports that Iran had signalled openness to talks to end the war. Comments by US President Donald Trump aimed at stabilising oil markets also helped ease investor concerns.

"On the global front, US markets ended the previous session on a firm note, while South Korea’s Kospi index is trading sharply higher, gaining more than 10 per cent, offering some supportive external cues," Ponmudi R, CEO of Enrich Money told PTI.

3) India VIX declines: The India VIX, often referred to as the market’s fear gauge, declined nearly 10 percent to 19.04. The index measures expected market volatility, and a decline generally indicates easing investor anxiety and improving market sentiment.

4) Rupee recovers: The rupee recovered from its recent lows and rose 48 paise to 91.57 against the US dollar, supported by gains in domestic equities. At the interbank foreign exchange market, the rupee opened at 92.16 and touched a high of 91.30 before trading at 91.57 against the American currency, up 48 paise from its previous close.

However, forex analysts said higher crude oil prices, a stronger US dollar and continued foreign fund outflows amid escalating tensions in the Middle East continued to weigh on the local currency.

5) Oil & gas stocks gain: Buying in energy stocks also supported the market. Shares of Reliance Industries and upstream companies such as ONGC and Oil India pushed the oil and gas index higher by about 2 percent.

Technical view

Anand James, Chief Market Strategist at Geojit Investments Limited, said the market saw sharp swings during recovery attempts.

"While wild swings amidst recovery attempts unfolded on expected lines, the hammering in the closing hour, shortly after filling the gap, takes away some upside momentum. The subsequent close near 24,450 lends a positive bias nevertheless," he said. According to him, the Nifty could see resistance around 24,625 and 24,840 levels, while a slip below 24,370 may open the possibility of a move towards 24,000–23,550. "A collapse is less expected today though," he added.

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