Strong support from heavyweights, particularly Reliance Industries, helped the stock market indices avoid another significant drop during Wednesday's trading session.
The entire pack of oil and gas stocks shone brightly in the session amid rising crude oil prices, driving expectations that higher crude prices will boost the margins of these companies. Despite weak global cues, such as a sell-off in US tech stocks overnight and concerns over a potential delay in the US Fed's rate cut in 2025, the Indian markets managed to rebound from the day's lows.
This recovery, despite the negative sentiment, was driven by the rally in the IT stocks, a strong rebound in ITC shares, and gains in banking stocks, which helped the indices to recover from early losses to end the session on a flat note.
However, the broader market failed to extend their winning rally in today's session as the strong selling pressure propelled them to conclude the session with deep cuts.
The Nifty wrapped up the session with a minor drop of 0.08%, closing at 23,688. From the day's low, the index recovered 192 points or 0.81%. Likewise, the Sensex rebounded 666 points, or 0.86%, from the day's low to end the session with a mild cut of 0.06%.
Midcap and smallcap stocks witnessed heavy selling pressure in trade, with the Nifty Smallcap 100 index ending the session with a deep cut of 1.65%, ending at 18,365, while the Nifty Midcap 100 index finished the session with a drop of 1.05%, closing at 56,270 level.
Commenting on today's market performance, Vinod Nair of Geojit Financial Services said, "Slowing economic growth projections and caution ahead of Q3 numbers added volatility in the market. However, the market witnessed a recovery from the day’s low owing to the accumulation of beaten-down blue-chip stocks and in expectation of government reforms in the upcoming budget to lift the tepid economy."
"The near-term sentiment is likely to be subdued due to the rise in US bond yield and fear of fewer rate cuts by the Fed," he added.
Shares of Reliance Industries ended the session with a gain of 2% at 1,265 apiece, marking the stock's biggest intraday gainer since mid-November as brokerages turned bullish on the stock after it has corrected 22.40% over the last 6 months.
Global brokerage Jefferies lifted its target price on the stock to ₹1950 apiece from ₹1295, while maintaining its 'buy' rating. It said the stock's valuation is currently at its cheapest since the COVID-19 pandemic. The brokerage highlighted medium-term growth challenges, particularly in the Retail segment, and projected lower earnings growth in FY25
Bernstein, meanwhile, maintained its 'outperform' rating on the stock, setting a target price of ₹1,520. The brokerage expects 2025 to mark a recovery cycle, with earnings growth driven by the Telecom and Retail segments, alongside improving refining margins.
Vatsal Bhuva of LKP Securities said, "The Nifty index is trading within a range of 23,500 to 24200. In Wednesday's session, it formed a hammer candlestick on the daily chart, closing near its 200-day EMA, thereby strengthening the 23,500-support level."
"A decisive move will require the index to close below 23,500, which could lead to heightened selling pressure, or sustain above 24,000 to pave the way for a potential rally toward 24,500. Monitoring these crucial levels is essential to identify the next trend in the index," Vatsal added.
(By arrangement with livemint.com)