The equity benchmark indices staged a sharp rebound on Wednesday after a steep fall in the previous session, with the Sensex jumping over 800 points and the Nifty reclaiming the 24,900 mark, led by strong buying in pharma, banking and auto shares. The domestic markets witnessed firm action, adding nearly Rs 4 lakh crore in investor wealth, supported by gains across sectors and positive cues from Asian markets.
After a positive start, the Sensex surged 835.2 points or 1.02 percent to an intraday high of 82,021.64. The Nifty50 advanced 262.3 points or 1.06 percent to 24,946.20, comfortably above the crucial 24,900 level.
Bharat Electronics, Cipla, Sun Pharmaceutical Industries, Bajaj Finance and HDFC Life Insurance Company were among the top gainers in the Nifty pack today.
Key Drivers of the Market Rally:
1) Pharma stocks in focus: Pharmaceutical stocks saw strong buying interest, with the sectoral index rising 2.29 percent intraday after a 1.31 percent decline in the previous trade. Eighteen out of 20 pharma constituents were trading in the green at around 11:30 AM, except Mankind Pharma and JB Chemicals & Pharmaceuticals.
Sentiment was boosted after the U.S. Department of Health and Human Services said it was working to implement an executive order to reduce healthcare costs. Analysts said the move targets branded drug pricing and is unlikely to affect generic or biosimilar players, offering relief to Indian manufacturers with exposure to the U.S. market.
2) Banking and financials firm up: Banking shares were among the top performers, with key sectoral indices including Nifty Bank, Financial Services, PSU Bank and Private Bank rising up to 1 percent. Major gainers included Bank of Baroda, Punjab National Bank, The Federal Bank, HDFC Bank and ICICI Bank, which rose as much as 2 percent.
3) Asian market support: A broadly positive trend in Asian equities also supported local sentiment. South Korea’s Kospi, China’s Shanghai Composite and Hong Kong’s Hang Seng indices traded in the green during the day.
4) Technical boost as Nifty reclaims 24,900: Analysts said a move above the key level of 24,788 on the Nifty helped build momentum through the day. According to Axis Securities, a sustained trade above this level could pave the way for further upside towards 24,906, 25,129 and even 25,247 levels.
On the downside, the immediate support zone lies near the 200-period moving average at the 24,050 mark. PL Capital noted that a decisive break above 25,000 could trigger a fresh leg of the rally in the days ahead.
Sameet Chavan, Head Research, Technical and Derivative - Angel One, noted "Prices are reverting to the short term moving average mean, with the 20DEMA (currently around 24400) serving as an important support. This level also coincides with a bullish gap area and the 61.8% Fibonacci retracement of the rally from the May 9th swing low. Prior to that, immediate support is seen near 24550. On the upside, the 25000 mark is likely to continue acting as a strong hurdle before the uptrend resumes."
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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