Stock Market Rebounds: Nifty, Sensex In Green - Are Bulls Back? Experts Decode

Stock Market Rebounds: The bulls in the Dalal Street are back in action, leading the domestic bourses to make a strong comeback after seven days of unabated losses. Driven by a strong up move in the Wall Street which relayed to Asian markets in no time – India’s Sensex and Nifty 50 surged almost 1.3 per cent in the second trading session of the week. 

The markets which bled mercilessly over the last one and a half months, analysts say, are trying to find a middle ground after moving to the oversold zone. 

“Today's bounce in the Indian markets needs to be seen as a bounce from oversold zones. Maybe foreign selling is abating, we will know that in a few days time,” said ace investor Ajay Bagga. 

The BSE’s 30-share Sensitive Index surged as much as 1,113 points or 1.43 per cent to touch the intraday high of 78,451.65 while the National Stock Exchange’s Nifty 50 1.39 per cent, or 326.85 points to an intraday high of 23,780.65.

“Nifty is currently at the 200-day EMA, which presents a value-buying zone for investors. Meanwhile, mutual funds, in particular, are sitting on heavy liquidity while awaiting dips for value investing,” said VLA Ambala, Co-Founder, Stock Market Today. 

Global Cues Drive Positive Momentum

As of 01:35 pm, Asian markets were trading largely in green driven by Wall Street gains. Australia’s ASX 200 ended 0.89 per cent while Japan’s Nikkei settled 0.45 per cent up. South Korea’s KOSPI gained 0.27 per cent while Hong Kong’s Hang Seng was trading 0.35 per cent higher on Tuesday. 

Ajay Bagga observed, “Positive global cues and a heavily oversold market are seeing a 1 per cent to 1.5 per cent bounce in the Indian markets today. The causes of the downtrend in Indian stocks are still very much present...FPI selling (though at a reducing intensity), downgrades to corporate earnings, slower economic growth and high real interest rates which are proving a drag on growth impulses,”

“We are going up in consonance with Asian markets,” Bagga added. 

Broader, Sectoral Indices Rise

Reflecting the surge in Sensex and Nifty, all the broader market indices were trading in green as of 01:19 pm with Nifty Smallcap 100 surging as much as 1.97 per cent. Though Nifty Midcap 100 also gained 1.72 per cent, the smallcap indices were outpacing the rest. 

In terms of sectoral performance, all key indices were trading in green with Nifty Media leading the pack. The index tracking listed media businesses was trading 3.91 higher led by Zee Entertainment which zoomed over 8 per cent after Punit Goenka resigns as the Managing Director of the group. 

Apart from media, Nifty Auto, Nifty IT, Nifty Realty, and Nifty Consumer Durables were the other top-performing sectors on Tuesday. 

Buy the Banking Dip

Ambala suggested a buying-on-dip strategy for banking stocks, however, warned the prevailing investors of the ‘sell on the rise’ sentiment. Ambala said, “Bank Nifty has also outperformed Nifty, experiencing a decline of 8.50 per cent against the latter’s 11 per cent drop. Notably, the banking index is trading with an RSI of 40 on the daily and 41 on the weekly timeframe, where a "buy on dip" strategy could benefit intraday traders. 

“The swing traders should be cautious as the market inclines towards the ‘sell on the rise’ trend. These factors suggest Bank Nifty could gain support between 49,800 and 49,650 and face resistance around 50,850 and 51,000,” Ambala added.