Market Report: Indian Benchmark Indices Surge After Recovery

Market Overview

Indian benchmark indices exhibited a strong recovery, erasing some of the previous day's losses and closing higher. The Sensex increased by 2,303 points to close at 74,382, while the Nifty surged by 735 points, ending at 22,620. This rebound follows a significant decline due to political uncertainty, but market sentiment improved considerably after Prime Minister Modi's speech.

Key Indices Performance

• Sensex: Up 2,303 points (3.20%) to 74,382
• Nifty: Up 735 points (3.36%) to 22,620

Sectoral Performance

All sectoral indices finished positively, with notable performances in:

• Auto, Bank, FMCG, Metal, Telecom, and Media sectors: Up 4-6%
• BSE Midcap index: Up 4%
• BSE Smallcap index: Up 3%

Market Breadth

• Advances: 2348 shares
• Declines: 1008 shares
• Unchanged: 74 shares

Volatility Index

• India VIX: Dropped by 29.4%, settling at 18.885

Technical Analysis

Nifty Index

• Support Levels: 22,000 and 21,800
• Resistance Levels: 22,800 and 23,000
• Moving Averages: Nifty touched its 100-day moving average at 21,786 and closed above its 21-day EMA.
• Key Indicators: A close above 22,800 could signal a bullish reversal, potentially rising to 23,000 and beyond.

Bank Nifty Index

• Support Levels: 47,800
• Resistance Levels: 49,500
• Strategy: Buy-on-dip with a stop-loss at 47,500
• Technical Signal: Recovery from its 200-day moving average and closing above the rising trendline and 21-day EMA

Options Data

• Call Side: Highest open interest at 22,800, followed by 23,000 strike prices.
• Put Side: Highest open interest at 22,200 strike price.

Outlook

With the major event behind us, a gradual reduction in volatility is anticipated. Sustaining above the 22,600 level is crucial for a move towards 23,000. The 21,800-22,000 range should provide support in case of profit-taking. Defensive sectors such as FMCG, IT, and pharma remain favored, with a recommendation to be selective in other sectors.

Market Sentiment

The recovery was driven by broad-based buying across various sectors, bolstered by political stability. Investors are now focusing on the formation of the government and the forthcoming RBI policy meeting. The market does not expect any change in RBI’s policy stance due to persistent high food inflation and an expected increase in government spending, which has positively impacted FMCG stocks.

Conclusion

The Indian markets demonstrated a strong recovery, with key indices reclaiming significant ground. The positive close and the bullish signals from technical indicators suggest a potential upward trend, though monitoring key levels will be crucial for determining future movements. Investors are advised to adopt a cautious yet optimistic approach, focusing on defensive sectors and strategic buying on dips.