After a two-day losing streak, bulls regained control on D-Street. Despite an initial dip, benchmark indices closed with significant gains, with the BSE Sensex surpassing 600 points and the NSE Nifty ending above the 21,400 mark. Investors capitalized on the opportunity to buy stocks on dips, leading to a 1% increase in both indices. However, concerns linger about short-term issues, particularly heavy foreign institutional investor (FII) selling. The day witnessed some volatility as Nifty's monthly and weekly futures and options (F&O) contracts approached expiration. Additionally, the quarterly earnings reports from key companies influenced market sentiment. At the closing bell, the Sensex rose by 689.76 points (0.98%) to reach 71,060, while the Nifty gained 215 points (1.01%) to settle at 21,454. Of the listed stocks, 2,131 advanced, 1,503 declined, and 108 remained unchanged. We anticipate tepid domestic and FPI volumes during this shortened week, with long-term investors remaining defensive until clear trading trends emerge later in January. Foreign investors continued to sell Indian equities in the previous session, with a net withdrawal of Rs 3,115 crore. Over the last five sessions, FIIs have sold equities worth Rs 27,830 crore, contributing to a net withdrawal of Rs 26,699 crore from the equity market in January. With only three trading sessions this week due to the holiday on Monday and Republic Day on Friday, Nifty Bank experienced a slight gain of 0.15%, closing at 45,082 Except for Nifty Private Bank, which slid 0.24%, all other sectoral indices on NSE closed in the green. The bulls' strong comeback, defending the crucial support level of 44,500 with observed put writing activities. Despite the rebound, the index is still in a downtrend, and a potential pullback rally towards 45,500 is anticipated. Closing above 45,500 could trigger further short-covering moves towards the 46,000 level, characterized by the highest open interest on the call side.
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