Closing Bell: Sensex rises 380 points, Nifty settles above 23,450 - What's behind market recovery? Anil Singhvi explains

Benchmark equity indices ended higher on Tuesday after witnessing a sharp recovery from intraday lows, supported by short covering in an oversold market, strong gains in information technology stocks and easing volatility.

The BSE Sensex rose 382.50 points, or 0.52 per cent, to close at 74,649.84, while the Nifty 50 gained 100.96 points, or 0.43 per cent, to settle at 23,483.55.

Market expert Anil Singhvi said the recovery was driven mainly by technical factors and weekly expiry-related positioning rather than any major fundamental trigger.

IT stocks lead market recovery

Information technology shares emerged as the biggest support for the market during the session. Among Sensex constituents, TCS was the top gainer, rising 6.53 per cent. Infosys advanced 5.66 per cent, while HCL Technologies climbed 4.08 per cent.

Other major gainers included Adani Ports, Tech Mahindra, Titan, ITC, Asian Paints, Eternal and Trent.

Shares of Mahindra & Mahindra, HDFC Bank, Maruti Suzuki, InterGlobe Aviation (IndiGo), Hindustan Unilever, Bharat Electronics, Kotak Mahindra Bank, State Bank of India, Bharti Airtel and Tata Steel also ended in positive territory.

"IT stocks came to the rescue when other sectors were not providing support. The sector's strong performance over the last two sessions helped the broader market recover," Singhvi said.

On the other hand, NTPC was the worst-performing Sensex stock, falling 2.89 per cent. Axis Bank, Power Grid Corporation, Bajaj Finance, Bajaj Finserv, ICICI Bank, UltraTech Cement, Sun Pharmaceutical Industries, Reliance Industries and Larsen & Toubro also closed lower.

Broader markets remain firm

The broader market also ended with gains, indicating buying interest beyond frontline stocks. The Nifty Next 50 rose 0.28 per cent, while the Nifty Midcap 100 gained 0.19 per cent. The Nifty Smallcap 100 advanced 0.40 per cent and the Nifty Smallcap 250 climbed 0.53 per cent.

The Nifty Microcap 250 outperformed the broader market pack with a gain of 1.09 per cent. The Nifty 500 index rose 0.37 per cent. The positive performance across broader market indices suggested that buying activity was not restricted to a few large-cap stocks.

Nifty IT tops sectoral chart

Among sectoral indices, Nifty IT emerged as the biggest gainer, surging 4.23 per cent. Nifty Consumer Durables rose 1.30 per cent, while Nifty FMCG gained 0.76 per cent. Nifty Auto advanced 0.72 per cent, and Nifty Realty added 0.67 per cent.

Nifty PSU Bank rose 0.55 per cent, while Nifty Metal gained 0.38 per cent. On the downside, Nifty Pharma declined 0.86 per cent. Nifty MidSmall Healthcare fell 0.80 per cent, and Nifty Financial Services slipped 0.59 per cent. Nifty Private Bank lost 0.22 per cent, while Nifty Oil & Gas edged down 0.18 per cent. Nifty Bank ended marginally higher by 0.13 per cent.

Oversold market triggers sharp short covering

According to Singhvi, the rebound was largely a result of short covering in an oversold market. "There was no major trigger behind the recovery. Just as the recent decline did not have a strong reason, the rebound was also driven mainly by technical factors," he said.

Singhvi noted that the Nifty Put-Call Ratio had fallen below 0.7, indicating oversold conditions in the market. "An oversold market and weekly expiry led to smart and sharp short covering. The recovery was not surprising because market indicators were pointing towards such a move," he said.

He added that Nifty found strong support near the 23,150 level, a zone closely tracked by traders, and recovered sharply after approaching it.

Apart from domestic factors, Singhvi said Asian markets also recovered from lower levels during the trading session. He added that crude oil prices remained largely stable in the $93-$95 per barrel range, helping improve investor sentiment.

India VIX signals lower market stress

Singhvi said the decline in India VIX was another positive factor supporting the market. According to him, the volatility index has repeatedly failed to sustain above its 100-day moving average near the 16.7 level.

"As long as VIX remains below the 100-day moving average, it is a supportive signal for the market. A rise above that level could indicate stress," he said.

For the near term, Singhvi identified the 23,125-23,275 zone as a key support area for Nifty. He said the 23,550-23,700 range could act as a resistance and profit-booking zone. A close above 23,550 would further strengthen market sentiment, he added.

For Bank Nifty, he placed the support zone at 53,250-53,450, while the 54,100-54,400 range could witness profit booking. Singhvi also said market participants continue to discuss the possibility of measures to attract long-term foreign capital amid recent foreign institutional investor selling. However, he added that there is no certainty over any such announcement.

He suggested that tax incentives for long-term sovereign wealth funds and pension funds could help attract stable foreign investments into Indian equities over a longer period.