Domestic markets kicked off Tuesday on a strong note, with benchmark indices rallying despite weak global cues and heavy foreign institutional selling.
The BSE Sensex jumped over 687.83 points to 81,874.27 by 10:18 am, while the NSE Nifty50 gained 214.15 points to 24,898.05. The rebound was broad-based, with all major indices trading higher after a sharp fall in the previous session.
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The surprising upmove comes amid rising volatility and concerns over global risk, including a recent US credit rating downgrade and surging bond yields in both the US and Japan. Yet, domestic investors appear to be shrugging off the noise, with analysts pointing to increased value hunting and contrarian bets as key drivers of the rally.
“The recent market correction, particularly in mid- and smallcaps, has brought the index to a critical trendline support level. We’re seeing signs of a hidden bullish divergence forming, which could spark a near-term reversal,” said Aditya Gaggar, Director at Progressive Shares. He noted key levels for the Nifty at 24,900 on the upside and 24,535 on the downside, with Bank Nifty resistance at 55,700 and support at 54,550.
The bounce also comes after a phase of profit booking that analysts say was overdue. Technical indicators had been stretched, and the correction helped normalise conditions, creating a setup for selective buying.
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Despite Monday’s massive FII outflow of over Rs 10,000 crore—a sharp reversal from their May buying spree—analysts say the domestic outlook remains constructive.
“Yes, the FII sell figure was a jolt, but the fundamentals haven’t deteriorated,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit. “We’re still seeing the effects of strong Q4 earnings, moderating inflation, and the possibility of another RBI rate cut, all of which are supportive for equities in the medium term.”
However, risk factors remain elevated. A possible escalation in the Middle East, rising COVID cases in some Indian states, and global bond market volatility have all added to investor anxiety.
“The spike in uncertainty is unnerving markets. US 30-year yields hitting 5%, and Japan’s 30-year yield touching 3.14%, is a rare combination. This may not hurt immediately, but it certainly clouds the medium-term picture,” said Anand James, Chief Market Strategist at Geojit.
From a technical standpoint, Nifty remains at a make-or-break level. While yesterday’s breach of 24,870 hinted at a short-term trend reversal, nearly 76% of Nifty 500 stocks still trade above their 10-day moving average, suggesting room for a bounce. A fall below 24,700 could, however, open the door to further downside toward 24,060.
For now, Dalal Street seems to be betting on resilience. But with no fresh triggers on the horizon and global uncertainties looming, the rally may turn stock-specific as investors tread cautiously through a likely consolidation phase.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
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