Sensex rebounds a day after crash, Nifty above 23,050. Where is D-Street headed?

The Indian stock market traded largely in the green on Friday, with the Sensex and Nifty witnessing minor gains after surging bond yields triggered a massive sell-off in the previous session.

The Sensex gained around 50 points to trade near 73,600, while the Nifty 50 held above 23,050. Broader markets remained under pressure, with the Nifty Smallcap 100 and Nifty Midcap 100 indices falling up to 0.3%.

Axis Bank and Asian Paints shares gained more than 1% each to lead gains on Sensex, while Infosys, Trent, Bajaj Finserv and HUL shares fell around 1% each. Among the sectors, Nifty IT slipped around 1%, while Nifty Metal gained 0.6%. The overall market breadth slightly remained negative, with NSE seeing 1,734 declines against 1,354 advances, while 105 stocks remained unchanged.


Also read | Why did market crash yesterday? Sensex plummets 1,248 points, Nifty ends below 23,100. 5 factors behind today's D-Street bloodbath

What lies ahead for Dalal Street?

"Sometimes many negative news come together to spook the markets. This was what happened yesterday when rising US bond yields, spiking crude and concerns over IRDAI’s proposals on insurance commissions spooked the Nifty by 383 points, said V K Vijayakumar, Chief Investment Strategist, Geojit Investments. Even though crude has cooled off a bit, Brent remains high at $106. The US 10-year yield hovering around 5.2% continues to be a strong headwind for equity markets globally and for India elevated crude would remain a big challenge if it remains high for too long, he added.

“High crude and stubborn inflation have increased the probability of another rate hike by the Fed in October. In brief, the headwinds for the market are getting stronger, preempting possibilities for a strong rally. Only a sharp decline in crude prices can help the market rally now. Therefore, watch out for developments on the crude front. Long-term investors can utilise the current weakness in the market to slowly accumulate fundamentally sound stocks, particularly the large-caps, now available at attractive valuations,” according to the analyst.

Technical view on Nifty

Nifty’s short-term structure has weakened significantly after the break below the previous seven-day lows and the 23,070 swing-low zone, accompanied by rising volumes, said Hitesh Tailor, Technical Research Analyst at Choice Broking Private. He sees the benchmark index finding immediate support at 22,800–23,000, while resistance is seen at 23,250–23,300.

“The near-term tone is likely to remain cautious following the recent breakdown, though the flat opening indication suggests some pause in selling. Weakness in the underlying structure and elevated external risks warrant a measured approach, with market participants likely to watch whether the indices can stabilise around the newly tested lower levels,” the analyst said.

Also read | PB Fintech shares crash 36%, bloodbath wipes off Rs 31,426 cr from m-cap after IRDAI’s reform plans. What Citi and Jefferies are warning

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.