Two Straight Sessions of Recovery, May Consolidate

It was not just a dead cat bounce in the Indian market but a formidable recovery with positive breadth since Friday. The headline NIFTY Index on Monday advanced to 24,350 after recovering from a low of 23,263 posted on Thursday—an impressive recovery of over 1,000 points.

The gains in the Indian market were supported by assembly poll results, along with the discounting of negative triggers such as weak corporate earnings for Q2. Going forward, key factors to watch include increased government spending to boost the Indian economy, potential rate cuts by the RBI ahead of the budget, and the budget’s focus on capital expenditure plans. The outflow of foreign investor funds towards China and the US may moderate, as China faces potential trade wars with the US, and US markets remain significantly overvalued compared to India.

In the markets today, as of writing, the NSE witnessed over 1,800 stocks advancing while 685 stocks declined. Almost all sectoral indices traded in the green, with the PSU Banks Index rising over 4%. Among PSU banks, Central Bank, Indian Bank, UCO Bank, and Bank of Baroda gained between 5% and 8%, while SBI rose by approximately 3.58%. In the private banking sector, ICICI Bank crossed the 1,300 mark on Monday, gaining almost 1.80% since Friday’s close.

In the latest updates, MSCI Global Standard Indexes added five Indian company shares. Voltas and BSE were upgraded from the small-cap segment to the mid-cap segment of the MSCI Emerging Markets Index, while Oberoi Realty and Alkem Laboratories were newly added to the index.

In the global markets today, the Japanese NIKKEI Index advanced over 1.3%, the UK FTSE Index rose 0.39%, and Dow Jones futures were up 0.64% at the time of writing.

Market Outlook for Traders

NIFTY: The index closed slightly indecisive today. Immediate resistance is seen at the 24,350 level, and if breached, it may face a strong hurdle in the 24,450–24,500 range, which is a significant resistance zone. On the downside, the 24,150 level is an important support, and if breached, a moderate decline toward the 24,000–24,050 range is possible. The broader range for NIFTY is now 23,800–24,500, and as long as the market sustains above 23,800, the recovery phase should continue.

BANK NIFTY: The index has strong resistance at the 52,500 level, and breaking above this may lead to further advances, or else the last two days’ gains may see some correction. Immediate support is pegged at 51,950, and a breakout below this level could push the index toward the 51,700–51,600 range.

NIFTY MIDCAP Select Index: The index has seen a strong bounce along with the broader market and may face strong resistance in the 12,680–12,700 area, which could act as an intraday selling zone with a stop-loss above 12,750. Immediate support is observed in the 12,550–12,500 range.

The report is prepared by Bitupan Majumdar, an independent SEBI-registered research analyst with registration code INH30006962. Please consult your financial advisor before making any investment decisions.