On December 13, Indian equity markets rebounded from significant intraday losses, overcoming global uncertainties and lackluster Asian market performance. This resurgence was fueled by value-driven purchases in undervalued stocks.
The recovery coincided with a decline in inflation and strength in key sectors, although investors remained cautious ahead of next week’s US Federal Reserve policy meeting and domestic economic data releases.
The BSE Sensex soared by 843 points, or 1 percent, closing at 82,133, while the NSE Nifty rose by 220 points, finishing at 24,768.
Both indices recovered nearly 3 percent from their earlier lows, with the Nifty Midcap Index ending the day nearly unchanged. The market rally was primarily supported by gains in the FMCG, IT, and banking sectors, bolstered by easing inflation and optimistic expectations for consumer demand during the festive season.
According to Vinod Nair, Head of Research at Geojit Financial Services, FMCG stocks benefited from price increases, a gradual correction in valuations, and hopes for a revival in consumer expenditure.
Additionally, improving industrial production (IIP) growth and easing inflation spurred investor interest in selected sectors like banking, IT, and telecom, as noted by Prashanth Tapse, Senior VP of Research at Mehta Equities. Banking stocks such as ICICI Bank and HDFC Bank experienced strong gains, pushing the Nifty Bank index up by 367 points to 53,584, after recovering more than 1,000 points from its intraday low.
Analysts indicate that easing inflation positively impacts this sector, with rising credit demand and stable asset quality enhancing investor sentiment. IT stocks also benefited from expectations of increased spending in the US, according to Nair.
Conversely, metal stocks suffered due to uncertainties surrounding China’s stimulus initiatives. The Nifty Metal index closed down by 0.7 percent, even after recovering nearly 2 percent from its lows, as doubts about China’s economic recovery persisted.
Technical indicators contributed significantly to the day’s market rebound. Friday’s low established a crucial support level for the Nifty, which rallied from the neckline of an inverse head-and-shoulders pattern, signaling bullish trends, according to Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
He noted, “The market movements indicate a strong resurgence of buyers following a period of volatility, with a potential target of 25,200 in the coming week.” As investors prepare for upcoming economic data, sector rotation is evident, with a focus on stock-specific movements driving the market’s recovery, said Siddhartha Khemka,
Head of Research at Motilal Oswal Wealth Management. While technical indicators indicate the likelihood of further gains, experts caution that market sentiment will depend heavily on external developments and domestic data.
With the US Federal Reserve meeting and domestic WPI inflation and PMI data on the horizon, traders are vigilant regarding global volatility and its possible effects. Ajit Mishra, SVP – Research at Religare Broking, advised investors to adjust their strategies accordingly, emphasizing the importance of risk management in navigating market fluctuations effectively.
