Tuesday morning’s sharp market rally despite global headwinds and heavy foreign selling:
The BSE Sensex jumped about 688 points to nearly 81,874, and the NSE Nifty50 gained 214 points to almost 24,898 by mid-morning, recovering strongly after Monday’s steep fall. This rebound was largely fueled by value buying in mid- and small-cap stocks, even as foreign institutional investors (FIIs) sold aggressively—over ₹10,000 crore on Monday alone—reversing their earlier spree in May.
Why the Rally Despite Negative Global Cues?
-
Domestic investors are viewing the recent correction as an opportunity, especially in mid- and small-caps, which had hit critical support levels.
-
Technical signals show signs of a bullish divergence, hinting at a possible short-term reversal.
-
The correction helped cool down overheated technicals, setting the stage for selective buying.
Aditya Gaggar of Progressive Shares pointed to key technical levels: Nifty resistance near 24,900 and support around 24,535, with Bank Nifty resistance at 55,700 and support at 54,550.
Risks Still Loom Large
-
Geopolitical tensions, especially in the Middle East.
-
Rising COVID cases in some Indian states.
-
Volatility in global bond markets, with US 30-year yields hitting 5% and Japan’s 30-year yield rising above 3%.These factors add uncertainty and could weigh on the market outlook beyond the short term.
Technical Outlook
-
Nifty is at a crucial juncture, with yesterday’s dip below 24,870 hinting at a potential short-term trend change.
-
However, about 76% of Nifty 500 stocks trading above their 10-day moving average signals there’s still room for an upward bounce.
-
A break below 24,700 could open the door for further downside toward 24,060.
