The Indian stock market witnessed strong buying interest on Thursday, March 5, largely due to short covering after the recent fall, which dragged the benchmark indices down by 4% in just a few days.
The Sensex jumped 900 points, or 1.14%, to close at 80,015.90. The NSE counterpart, the Nifty 50, jumped 1.17% to end at 24,765.90.
The domestic market witnessed healthy, broad-based buying, with the BSE 150 MidCap Index rising 1.44% and the BSE 250 SmallCap Index climbing 1.38%.
The market rebounded on short covering amid reports that Iran had made conditional offers to the US. Mint could not independently verify these reports by 3:30 pm on Thursday.
The rupee’s rise also seems to have influenced sentiment.
The Indian rupee ended 54 paise, or 0.60%, higher at 91.60 per dollar on Thursday. According to Reuters, the Reserve Bank of India stepped in aggressively to support the currency, which fell to a record low of 92.30 per dollar on Wednesday.
Investors got richer by ₹6 lakh crore in a single session as the overall market capitalisation of BSE-listed firms rose to ₹453 lakh crore from ₹447.2 lakh crore in the previous session.
Meanwhile, the US-Iran war continues with a barrage of missile exchanges. According to Euro News, Iran has struck an oil tanker in the Gulf, which reportedly belonged to the United States.
Why did the Sensex jump 900 points today?
The Sensex rose on Thursday after losing 3,160 points, or 3.8%, over the last four sessions. According to experts, the recent selloff placed the index in the oversold territory, so a technical rebound was expected.
“Market momentum strengthened toward the close after reports that Iran had conditionally offered to abandon its nuclear program, raising hopes of de-escalation in the ongoing US/Israel–Iran tensions,” Vinod Nair, Head of Research, Geojit Investments Limited, said.
“Investor sentiment improved after comments from the US deputy secretary suggested that an India–US trade deal may be nearing completion. Value buying also emerged in sectors such as metals, consumer durables, realty, and auto, following recent corrections, while IT stocks resumed their decline partly due to the strengthening of the Indian rupee,” Nair added.
According to Hitesh Tailor, a technical research analyst at Choice Broking, today’s market rebound was largely driven by technical and derivative factors.
“After the recent sharp correction, benchmark indices had slipped into deeply oversold territory, prompting a relief rally. The cooling in volatility, with India VIX easing from elevated levels, suggests that a significant portion of the geopolitical risk premium had already been priced in during the earlier decline,” Tailor said.
Reliance, L&T, and HDFC Bank were the top contributors to the gains in the Sensex index, while ICICI Bank and SBI were the top drags on it.
In terms of percentage gains, Adani Ports, L&T, NTPC, and Reliance stood at the top in the Sensex index. On the other hand, Tech Mahindra, HC Tech, and HUL ended as the top losers in the index.
Technical outlook for the market
The Nifty formed a bullish candle on the daily charts, suggesting the pullback may continue.
According to Shrikant Chouhan, the head of equity research at Kotak Securities, 24,600 and 24,500 would act as key support levels for the market. Above these levels, it may continue its positive momentum up to 24,950 and 25,000. On the flip side, below 24,500, the sentiment could change, and traders may prefer to exit their long positions.
Sudeep Shah, the head of technical and derivatives research at SBI Securities, said 24,550–24,530 will act as important support for the index.
“On the upside, the 24,920–24,950 zone will act as stiff resistance. Any sustained move above 24,950 will lead to extension of the pullback rally to the 25,100 level,” said Shah.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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