Markets rebound from 5-day losing streak on bargain buying, easing global cues; analysts say worst not over yet

In early trade, the Nifty briefly tested resistance near the 24,500 mark, though profit booking later capped gains.

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India’s share market rebounded on October 28 after a 5-day losing streak, as investors seized bargain hunting opportunities following the correction, while easing crude oil prices and easing Middle East tensions added to the domestic market relief.

Even so, analysts advise caution, saying today’s rally may not yet suggest a reversal from weakness.

Benchmark indices gained up to 0.76 percent at close, with BSE Sensex up over 600 points at 80,005, and NSE Nifty 50 up about 160 points at 24,339.

This came after a 2 percent fall seen in the previous five sessions. Broader markets rallied too, with Nifty Midcap 100 index up 0.83 percent today, after falling 6 percent last week.

Gains were supported by buying in financial, metal, and realty stocks. ICICI Bank was among the top performers in the benchmark indices, surging 3 percent following a 14.5 percent jump in quarterly profit to Rs 11,746 crore, boosting the overall market sentiment.

What led to the rebound in Nifty, Sensex today

Following steep recent corrections that saw mid-cap and small-cap indices drop nearly 6-7 percent from their peaks, investors rushed for bargain buying, although technical experts caution against overestimating the rebound’s extent.

Ruchit Jain, Lead Researcher at 5Paisa.com, said that FIIs selling in cash, and short positions in index futures prompted last week’s slide, before they partially covered those positions.

The market also benefited as Israel’s limited attack on Iran over the weekend raised hopes for regional peace, contributing to a positive market opening. Egypt’s proposed two-day truce and hostage exchange, along with an emergency United Nations Security Council meeting, further softened investor concerns. Brent crude prices stabilised at $74.38 per barrel following these developments, alleviating supply concerns.

Market outlook cautious despite today’s bounceback

Despite the recovery, analysts say that challenges persist for any significant upside.

Ajit Mishra, SVP Research at Religare Broking, said that “A decisive close above 24,500 is essential to signal further strength. Without that, the market risks reverting to its downtrend.”

He advised investors to focus on strong large- and mid-cap stocks while avoiding averaging down on losing holdings.

Similarly, Kranthi Bathini, Director - Equity Strategy at WealthMills Securities, said that the US election uncertainties will continue to have influence on market resilience, with Nifty’s 24,000 level seen as crucial support.

Technical challenges and key levels ahead

Technical analysts say that the resistance zone for Nifty is around 24,600-24,700. Kushal Gandhi, Technical Analyst at StoxBox, sees potential selling pressure at these levels unless decisively breached. He said that the bearish sentiment was further accentuated by the substantial expansion in Nifty's trading range last week -- which saw a 904-point swing, resulting in a 673-point net loss.

The 14-day Relative Strength Index has also slipped below 30, indicating an oversold market for the first time in a year. On the volatility front, India’s VIX surged 12.23 percent to 14.63. A rise above 15.7 could reflect increased caution, signalling more challenges ahead for traders.

Broader market and FII-DII flows

Market breadth reveals waning momentum, with fewer stocks trading above key moving averages. Notably, stocks above their 50-day average fell below 20 percent, with similar levels last seen in early 2023 and mid-2024, raising concerns over sustained market pressure, said Gandhi.