After a week of relentless selling that sent the Indian stock market tumbling, investors finally saw some green on Monday. The Sensex and Nifty staged a comeback, driven by a resurgence in heavyweight stocks like Reliance Industries and HDFC Bank. But is this just a temporary reprieve, or is the market finally turning a corner?
A relief rally:
The Sensex closed the day up 498.58 points (0.64 percent) at 78,540.17, while the Nifty gained 165.95 points (0.70 percent) to reach 23,753.45. However, market breadth remained negative, with more stocks declining than advancing.
"Today's gains might look like a relief rally, but the market quickly lost its early momentum," said Ajit Mishra, Senior Vice President at Religare Broking. "Heavyweights like HDFC Bank and Reliance tend to attract buying interest when they become oversold, and that's what we saw today. But the real test is whether these gains can be sustained."
Sectoral performance:
- Auto: The auto sector was the only one to end the day in the red, facing continued selling pressure.
- IT: The IT sector, which initially showed promise, gave up its gains to close flat.
- Banking: Banks performed well, with HDFC Bank, ICICI Bank, and SBI leading the charge.
- Metal: Metal stocks also saw gains, with JSW Steel and Tata Steel among the top performers.
- FMCG: The FMCG sector, which has been under pressure in recent months, gained some ground.
Mid- and Small-Caps:
The mid- and small-cap indices presented a mixed picture. While the mid-cap index edged higher, the small-cap index ended slightly lower. However, both indices have shown resilience over the past three months, outperforming the Nifty.
Notable movers:
- International Gemological Institute: Shares of the newly listed company continued their upward trend, closing 2 percent higher.
- India Cements: Shares surged nearly 8 percent after the CCI cleared a major deal with UltraTech Cement.
- HCC: Shares slumped over 6 percent after the company announced the sale of its stake in Steiner AG.
Analysts are cautiously optimistic about the market's near-term prospects. "Large-cap stocks offer some valuation comfort, and technical indicators are favorable," said Mishra. "However, sustaining this rally will depend on earnings support, especially for mid- and small-cap stocks."
Anand James, Chief Investment Strategist at Geojit Financial Services, expects the Nifty to attempt a pullback above its 200-day moving average. "If relief rallies gain strength, we could see the Nifty reach 24,165," he said. "However, failure to hold above 23,700 could signal weakness."
Monday's rebound provided a much-needed respite for investors after a tumultuous week. However, the market remains volatile, and it's too early to say whether this marks a sustained turnaround. Investors will be closely watching corporate earnings and global cues in the coming days to gauge the market's direction.
The ability of the market to hold onto these gains will be crucial in determining whether this is just a temporary bounce or the start of a new uptrend. The coming weeks will be critical for the Indian stock market, and investors will need to stay vigilant and informed to navigate the uncertainties ahead.
DISCLIMER: Prameya or Prameya News7 does not endorse the views or recommendations expressed by experts/brokerages in this article. These are solely their opinions. Readers are advised to consult with a qualified financial advisor before making any investment or trading choices.
