Sensex rises 47 points, Nifty closes above 24,200 as market recovers all morning losses. What’s ahead?

The Indian stock market recorded a sharp recovery from intraday lows on Monday, with Sensex and Nifty closing in the green with marginal gains after crashing nearly 1% each in the morning.

At the end of the session, Sensex was up around 47 points at 77,616 while Nifty 50 was up only 4 points at 24,211. While the closing figures indicate marginal gains, the benchmark indices have sharply recovered from morning lows. Sensex rebounded around 759 points from its intraday low, while Nifty 50 recovered 211 points after falling to 24,000.

The gains on Sensex were led by IT stocks, including TCS, HCLTech, Infosys and Tech Mahindra, which gained 3-5%. On the other hand, Tata Steel and Eternal shares dropped nearly 2% each to follow.


Broader markets also recovered from intraday lows, with Nifty Smallcap 100 and Nifty Midcap 100 indices closing with marginal gains. This came even as India VIX, which measures market volatility, soared more than 8% to 13.28.

Sectorally, Nifty IT surged nearly 4% to lead gains. Nifty Consumer Durables, meanwhile, gained more than 1%. Bucking the trend, Nifty FMCG dropped more than 1%. The overall market breadth was slightly positive, with 1,776 stocks advancing on the NSE, while 1,557 declined and 109 remained unchanged.

US-Iran tensions escalate

The sharp recovery in the Indian stock market came despite rising tensions between Iran and the US. The two countries exchanged heavy missile and drone attacks over the weekend and into Monday, with Iran striking US facilities across the Gulf and saying it had again closed the Strait of Hormuz.

Iran's Revolutionary Guards said on Monday they had targeted U.S. military facilities in Bahrain and Kuwait, destroyed radar systems in Oman, and hit fuel tanks and ammunition depots at Prince Hassan Air Base in Jordan in response to US strikes.

However, Bloomberg reported that a growing number of ships have passed through the Strait of Hormuz secretly in recent days, while observable traffic has dwindled, following the resumption of fighting between the US and Iran.

After nearing $80 per barrel in the morning, oil prices also erased some of the sharp gains, although they remain higher than last week’s lows. Brent crude futures rose over 2% to near $78 per barrel, while WTI Crude futures neared $73 per barrel.

FII buying

Amid the seesaw political game in the Middle East, foreign investors remained bullish on the Indian stock market, net purchasing Indian equities worth around Rs 2,604 crore on Friday, according to provisional data on the NSE.

This marks the eighth consecutive session when FIIs have remained net buyers on Dalal Street. They have overall bought Indian equities worth nearly Rs 11,077 crore in July so far, after a sharp sell-off earlier this year.

What lies ahead?
The back-and-forth movement in the West Asia crisis has become the new normal, said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He noted that the attempt by Iran to weaponise geography has negative implications for energy importers like India. “And President Trump’s totally inconsistent stand vis-à-vis Iran has rendered stability a thing of the past. We don’t know how this crisis will pan out,” he added.

“From the market perspective, particularly for India, the price of crude is the crucial factor. There is no panic in the oil market like in March… So long as Brent trades below $90, the market won’t be impacted significantly. But if Brent shoots up to above $90, there can be a significant correction in the market. So, watch out for the price of crude,” according to the analyst.

Vijayakumar highlighted that a positive factor that is imparting resilience to the market now is the strong FII inflows. He added that the weakness in the chip trade in South Korea is turning out to be positive for India. “FIIs are reducing the concentration risk in chip stocks despite their attractive valuations and moving money to stabler markets, where there is no concentration risk and long-term growth prospects are bright. If this trend sustains, the Indian market will continue to remain resilient,” he concluded.

Technical view on Nifty
Nifty 50 witnessed a meaningful recovery as the 24,000 level acted as a crucial support for the index, said Rupak De, Senior Technical Analyst at LKP Securities. He added that on the upside, the index rebounded towards 24,200. The overall sentiment remains bullish, with the bulls successfully defending the 24,000 mark.

A strong recovery from the day's low indicates underlying strength in the market, according to the analyst. “A decisive move above 24,200 could trigger fresh short-term momentum, potentially propelling the index towards 24,500 and higher. On the downside, a decisive breach below 24,000 could weaken the bullish sentiment and shift the near-term bias in favour of the bears,” he added.

(With inputs from agencies)

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