Weekly Wrap: Sensex, Nifty post strong recovery led by IT shares

In the last trading session of the week, Indian stock markets witnessed a significant rebound, overcoming the negative sentiment that prevailed during the Independence Day week. The Bombay Stock Exchange's 30-share Sensitive Index (Sensex) surged by 1,331 points, or 1.68 per cent, to close at 80,436.84, while the National Stock Exchange's broader Nifty 50 index climbed 397.40 points, or 1.65 per cent, to settle at 24,541.15 on Friday.

The rally was driven primarily by information technology (IT) companies, with none of the Sensex stocks ending in the red. On the Nifty 50, only three stocks—Divi’s Lab, Dr. Reddy’s, and SBI Life—posted minor losses, closing the session slightly lower.

Among the top gainers on the NSE were Wipro, Tech Mahindra, Grasim, Mahindra & Mahindra, Tata Motors, Shriram Finance, and UltraTech Cement. Wipro and Tech Mahindra emerged as the biggest winners of the day, with Wipro surging by 4.31 per cent and Tech Mahindra by 4 per cent.

“Despite experiencing volatility throughout the holiday-shortened week, the markets ultimately finished with strong gains. The week started on a subdued note, influenced by mixed signals and midweek pressure on select heavyweight stocks, which turned sentiment negative. However, a sharp recovery on Friday reversed this trend, enabling the benchmark indices to close near their weekly highs,” said Ajit Mishra, SVP research at Religare Broking.

Sector-wise, IT stocks led the charge, followed by realty and auto, while energy and metal sectors ended in the red. The broader indices also managed to recover, with the midcap index gaining nearly a percent and the smallcap index finishing almost flat.

With the earnings season concluded, the focus now shifts to global market cues, particularly after the notable recovery in US markets, which has alleviated recession fears. Domestically, investors will be closely monitoring institutional flows and upcoming economic data, such as the HSBC India Manufacturing PMI and HSBC India Services PMI, for further direction.

“The Nifty index has broken out of its consolidation phase, reclaiming its short-term moving average, the 20-day EMA, buoyed by the sharp rebound in global indices. It now appears poised to fill the gap around 24,700 before potentially moving towards its record high of 25,078. In case of a dip, the 24,300-24,400 zone is expected to provide immediate support, with major support at 24,000, near the 50-day EMA,” Mishra said.

Given the selective participation in the market, experts suggest focusing on stock selection, with a preference for IT, FMCG, and select private banking majors, while remaining selective in other sectors, he added.