Index heavyweights, investors' buying on dips aid market recovery

HDFC Bank rose 1.8 per cent and contributed the most to Sensex gains, followed by Reliance Industries, which gained 1.4 per cent

Indian equity benchmarks recovered from their losses in the previous session and ended higher on Thursday, aided by gains in the index heavyweights and buying on the dips by investors.

The Sensex ended the session at 70,865, a gain of 359 points or 0.5 per cent. Similarly, Nifty ended at 21,255, a gain of 105 points or 0.5 per cent.

On a month-to-date (MTD) basis, the Sensex gained 5.8 per cent and Nifty 5.6 per cent, their best monthly gains since July 2022.

HDFC Bank rose 1.8 per cent and contributed the most to the gains made by the Sensex, followed by Reliance Industries, which gained 1.4 per cent.

Analysts attributed the decline on Wednesday to profit booking after the markets hit new highs and said the trajectory mostly stayed the same.

“Though the market saw profit booking yesterday, the underlying sentiments remain positive given the robust micro and macro domestic factors. Further markets are likely to move in a range as investor participation is expected to gradually decline globally ahead of the Christmas and New Year holidays,” said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.

Positive sentiments amid strong macro numbers, the prospect of rate cuts by major central banks in the Western world and the results of the recently concluded state elections have helped markets post gains in the last seven weeks.

Markets are expected to rise further with investors globally firmly anchored in the hopes of rate cuts by the Federal Reserve at the beginning of next year.

Some experts have been advising investors to consider the declines as buying opportunities.

They said that though there could be turbulence going ahead, a Fed pivot is an eventuality.

Philadelphia Fed President Patrick Harker added to the rate-cut bets on Wednesday and said it's important that interest rates move lower. However, Harker cautioned that the central bank should not move too fast.

Among the peer markets, Chinese equities gained after data showed signs of recovery in China's ailing property market.

Going forward, macro data from the US and UK will likely determine the market trajectory.

“We expect consolidation in the index now; however, there will be no shortage of trading opportunities on the stock-specific front. Participants should align their trades accordingly and prefer sectors showing relatively higher strength,” said Ajit Mishra, SVP-technical researcher of Religare Broking.

“Apart from the domestic factors, the performance of the US markets would play a critical role in the next directional move, so keep a close watch,” Mishra added.