Stock Market Today: Reliance, ICICI Bank, Infosys propel Sensex by 2,000 points; will the rally last?

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 over 2 per cent on Friday, November 22, on gains led by Reliance, Infosys, ICICI Bank and TCS.

The Sensex opened at 77,349.74 against its previous close of 77,155.79 and jumped 2,062 points, or 2.7 per cent, to the level of 79,218.19. The Nifty 50 opened at 23,411.80 against its previous close of 23,349.90 and climbed 606 points, or 2.6 per cent, to 23,956.10.

Finally, the Sensex closed 1,961 points, or 2.54 per cent, up at 79,117.11, while the Nifty 50 ended 557 points, or 2.39 per cent, higher at 23,907.25.

The market witnessed a broad-based buying interest as the BSE Midcap and BSE Smallcap indices rose 1.26 per cent and 0.90 per cent, respectively.

The overall market capitalisation (m-cap) of BSE-listed firms rose to nearly ₹432.7 lakh crore from ₹425.4 lakh crore in the previous session, making investors richer by about ₹7.3 lakh crore in a single day.

Only one stock - Bajaj Auto (down 0.39 per cent) - closed in the red in the Nifty 50 index.

Sectoral indices today

Barring Nifty Media (down 0.32 per cent), all sectoral indices closed with healthy gains.

Nifty IT, Realty, PSU Bank, Oil & Gas and FMCG indices jumped 2 to 3 per cent. Nifty Bank closed 1.51 per cent higher.

Why did the Indian stock market rise today?

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.

Heavyweight stocks such as Reliance Industries, Infosys, TCS, ICICI Bank, ITC, L&T and SBI clocked healthy gains, boosting market benchmarks.

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.

Rupak De, Senior Technical Analyst at LKP Securities, pointed out that the Nifty 50 witnessed a strong recovery and moved back above the 200DMA, indicating an improving trend. Additionally, it has broken out of a few days of congestion on the daily timeframe. The RSI has entered a bullish crossover near the oversold zone, suggesting positive momentum.

"The sentiment appears favourable for a meaningful rally in the short term as long as the index stays above 23,600. Immediate resistance is seen at 23,960–24,000. A decisive move above 24,000 could trigger a rally toward 24,500. On the downside, supports are placed at 23,750 and 23,550," said De.

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 regarding technical levels. The market is hovering around 200 DMA. when the index comes above the level, there tend to be some algo trade and some institutional buying," Prashanth Tapse, Senior VP (Research) at Mehta Equities.

Experts say that at this juncture, one should look at the market in stock-specific terms and not at 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.

Technical analysts see the closing above the 200-day SMA (Simple Moving Average) as a positive sign, and the momentum may continue if the index stays above it. 

Amol Athawale, VP of technical research at Kotak Securities, underscored that after a long correction, the market took support near 23,265 and reversed. Post reversal, it cleared the 200-day SMA and closed above it, which is largely positive.

"We believe that as long as the market trades above the 200-day SMA or 23,600/77,500, the pullback formation will likely continue. On the higher side, it could increase to 24,000-24,200/79,400-79,900. On the flip side, below 23,600/77,500, the sentiment could change, and traders may prefer to exit from the trading long positions," said Athawale.

Read all market-related news here

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.

More to come…