Stock market today: After declining by over half a per cent each in the previous session, Indian stock market benchmarks—the Sensex and the Nifty 50—rebounded smartly with gains of around 1 per cent during the morning session on Friday, November 22.
The Sensex opened at 77,349.74 against its previous close of 77,155.79 and rose 1.4 per cent to the level of 78,223.41. The Nifty 50 opened at 23,411.80 against its previous close of 23,349.90 and climbed 1.5 per cent to 23,689.15.
Around 12:50 pm, the Sensex was 1.27 per cent up at 78,138.37, while the Nifty 50 was 1.35 per cent up at 23,665.05.
The market witnessed a broad-based buying interest as the mid and small-cap indices also rose about half a per cent.
The overall market capitalisation (m-cap) of BSE-listed firms rose to nearly ₹429 lakh crore from ₹425 lakh crore in the previous session, making investors richer by about ₹4 lakh crore in a single day.
Why is the Indian stock market rising?
Experts observed that the domestic market saw healthy buying in several sectors today, showing a smart recovery after yesterday’s selling, which was largely due to the fallout of the Adani issue.
Experts believe the market’s rebound is driven more by technical factors than by fundamental ones, noting a lack of fresh, positive triggers to drive further momentum.
“The current market texture is weak but oversold; hence, the strong possibility of one quick pullback rally is not ruled out. For the traders now, 23,350 and 23,400 would be the key levels. Above 23,400, we could see one quick pullback rally till 23,500-23,550. On the flip side, a fresh selloff is possible only after the dismissal of 23,250. Below this, the selling pressure is likely to accelerate, and the market could slip to 23,175-23,150,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities.
A dead-cat bounce?
The domestic market posted sharp gains on Friday morning despite lingering concerns over the escalating Russia-Ukraine conflict, weak July-September quarter earnings, and significant foreign capital outflows.
“After yesterday’s fall, the market has just rebounded, which could also be a dead cat bounce. We must wait a few days to see if the rally will be sustained because tomorrow is assembly election result day. If there is a negative surprise tomorrow, then the market could fall on Monday,” said Avinash Gorakshakar, the head of research at Profitmart Securities.
“Everyone knows this is not a market which will go in one direction only. There will be ups and downs. When the market comes down significantly, a bounce is obvious,” Gorakshakar said.
“Sometimes there could be a dead cat bounce in terms of technical levels. The market is hovering around 200 DMA and as soon as it comes above the level, there is some algo trade and some sort of institutional buying,” Prashanth Tapse, Senior VP (Research) at Mehta Equities.
Experts say at this juncture, one should look at the market in stock-specific terms and not on the index level due to weak Q2 numbers, stretched valuations and global uncertainty.
Will the rally sustain?
Experts appear cautious about the market for the near term due to global uncertainty and domestic factors. The focus now is on the Maharashtra election outcome on November 23, which will be an immediate trigger for the market.
“The market can recover from the present levels since yesterday’s selling was largely due to the fallout of the Adani issue. But considering the headwinds the market is facing, a sustained recovery is unlikely,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“Whether the market will sustain its gains is a big billion-dollar question. The market is looking at the outcome of the Maharashtra election right now,” said Tapse.
Gorakshakar pointed out that Donald Trump is set to assume the presidency in January next year, which will bring greater clarity to the market outlook. Until then, a dramatic shift in market sentiment is unlikely.
Moreover, as December progresses, particularly after December 15, foreign portfolio investors (FPIs) typically go on holiday, leading to lower market volumes.
“Meaningful activity is expected to resume after the first week of January when the market begins factoring in Trump’s policy statements. Additionally, the February Budget will be a crucial event shaping market sentiment,” said Gorakshakar.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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First Published
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22 Nov 2024, 12:53 PM IST
