Stock market today: Nifty 50, Sensex snap 5-day losing streak; 4 factors behind Dalal Street’s rally today

Stock Market Today: Indian benchmark indices made a strong comeback on Monday, October 28, as the rally in financials and metal stocks, coupled with positive global cues, helped the bulls take charge of the market after a five-day slump.

Consequently, the Nifty 50 closed the session with a gain of 0.65% at 24,339. During intraday trading, the index came close to the 24,500 mark, falling just 8 points short. The S&P BSE Sensex wrapped up the session with a gain of 0.6%, ending above the 80,000 level at 80,005. The index during the day, reached a high of 80,539. 

Meanwhile, both mid- and small-cap indices also experienced a strong rebound, with the Nifty Smallcap 100 gaining 1.20% and the Nifty Midcap 100 rallying 0.83%. 

All major sectoral indices ended in positive territory in today's trade, with the Nifty PSU Bank Index leading the way, with a 4% surge. This marks its biggest intraday jump in a month, driven by the strong performance of Bank of Baroda's September quarter earnings, which boosted investor sentiment within the sector.

The Nifty Metal index followed as the second top gainer, posting a gain of 2.4%. Additionally, the Nifty Media and Nifty Realty indices, along with Nifty Pharma concluded the trading session with gains exceeding 1%.

Looking at the individual stocks, 35 constituents of the Nifty 50 index closed in positive territory, with Shriram Finance leading the way, gaining 5.4%. Following closely were Adani Enterprises, ICICI Bank, Wipro, and eight other stocks, each recording gains of over 2%

On the flip side, Coal India tumbled 4.2% following its Q2 results, while Bajaj Auto extended its downtrend for the third consecutive session on Monday, losing an additional 2% and settling at ₹10,011 apiece. In October, the stock lost 19% of its value, marking its biggest monthly drop since March 2020.

Other stocks, including Axis Bank, Hero MotoCorp, Kotak Mahindra Bank, Bharat Electronics, Trent, and three additional stocks, ended the session with losses exceeding 0.5%.

Below are four key factors that supported the indices in making a sharp rebound:

No major geopolitical escalation

Although Israel conducted targeted strikes against Iran over the weekend, there were no major reported attacks on civilians, nuclear facilities, or oil fields, providing significant relief to financial markets.

Experts believe the chances of retaliation from Iran are minimal, which alleviated fears of further escalation in the region.

Sharp drop in crude prices

Crude oil prices reacted negatively to Israel's attack on Iran, leading to a 6% decline in both Brent and WTI crude futures during today's session.

On the demand side, persistent signs of weak economic activity in top consumer China continue to impact sentiment, as recent weekend data indicated a decline in industrial profits despite the government's recent stimulus efforts

“As a major importer, India benefits from reduced crude costs, which can help stabilise inflation and, in turn, strengthen consumer purchasing power. This relief in inflationary pressures also opens up space for RBI to maintain or consider further rate cuts, supporting broader economic growth,” said Pranay Aggarwal, CEO, Stoxkart.

Short covering

The Indian stock market experienced a short-covering rally on Monday after five consecutive days of steep declines. The Nifty 50 had fallen by 2.58% last week, marking its fourth consecutive week of losses, analysts said.

“The trend of flight to quality is likely to sustain given the good numbers from banking majors like HDFC Bank and ICICI Bank where valuations continue to be fair. Investors can profit from these polarised valuations. The global market structure may turn favourable after the subdued Israeli strikes against Iran avoiding the Iranian oil fields which has resulted in a sharp drop in crude prices. The imminent US presidential elections and the uncertainty associated with that will continue to weigh on markets,” said Vijayakumar.

Technical factor

On Friday, the Nifty 50 made a low at its support of 24,100 levels and bounced during the last session of the day. On a daily chart, the index formed a bearish candle with a big wick on the downside, indicating strong buying, which came near the closing session.

On the upside, Nifty 50 broke its resistance level at 24,400 today, and analysts believe a breakout above this level could potentially lead the index to extend gains to 24,750.

“The Nifty could attempt a bounce this week, according to historical patterns for the current week in seasonal data. This week is the 44th week of the calendar year, and a 10-year analysis starting from 2014 indicates that the market has ended higher 80% of the time during this week, with an average gain of 1.4%. In fact, the last time this week ended in the red was eight years ago in 2016,” said Akshay Chinchalkar, Head of Research, Axis Securities.

According to him, the tactical trend remains down and any bounce on the Nifty 50 will face stiff resistance in the 24,413 - 24,462 area, while support lies at 24,073. Any break below this support will bring the all-important 23,779 into the picture.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.