Stock Market Surge

After a steep decline of over half a percent in the previous session, Indian stock market benchmarks—the Sensex and Nifty 50—rebounded on Friday morning, November 22, 2024, with both indices gaining nearly 1%.

Market Opening and Early Movements

The Sensex opened at 77,349.74, up from its previous close of 77,155.79, and saw an increase of over 1%, reaching 77,994.60. Similarly, the Nifty 50 opened at 23,411.80, compared to its previous close of 23,349.90, and climbed to 23,608.95, marking an uptick of more than 1%.

By 10:25 am, the Sensex had risen by 0.80% to 77,768.99, while the Nifty 50 had also gained 0.80%, standing at 23,535.50.

The market exhibited broad-based buying, with mid and small-cap indices rising by about half a percent. The total market capitalization (m-cap) of BSE-listed companies surged to nearly ₹429 lakh crore, up from ₹425 lakh crore in the previous session, adding approximately ₹4 lakh crore to investors’ wealth in just one day.

While the market recovery is being welcomed, experts suggest that the rebound may be more a result of technical factors rather than fundamental ones. Analysts noted that the previous day’s declines were largely driven by the fallout from the Adani issue, but there are no fresh positive triggers to propel the market forward.

“The market texture remains weak but oversold, and hence a quick pullback rally is a possibility,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities. He identified 23,350 and 23,400 as critical levels for traders, with the potential for a rally if these levels are surpassed.

A ‘Dead Cat Bounce’ or a Sustained Rally?

Despite the morning gains, concerns linger about a possible ‘dead cat bounce,’ where a temporary recovery follows a sharp fall. This could be followed by a reversal if there is no sustained momentum. “The market is rebounding after yesterday’s fall, but we must wait to see if the rally holds,” said Avinash Gorakshakar, Head of Research at Profitmart Securities. He highlighted that the Maharashtra election results, due to be announced tomorrow, could serve as a key catalyst for market movement in the short term.

Prashanth Tapse, Senior VP of Research at Mehta Equities, also mentioned that the market is hovering around the 200-day moving average, which could lead to algorithmic and institutional buying, contributing to the current gains.

Outlook: Will the Rally Last?

Looking ahead, experts remain cautious about the market’s ability to sustain the rally due to global uncertainties and domestic factors. The outcome of the Maharashtra elections, scheduled for November 23, is expected to be a significant trigger for the market in the immediate term.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, warned that while there could be short-term recovery, sustained growth seems unlikely given the challenges the market faces. “The market is watching the Maharashtra election closely, and any negative surprises could lead to a downturn,” he stated.

Global issues, such as the ongoing Russia-Ukraine conflict, and domestic factors, including the upcoming U.S. presidential election and India’s federal budget, are likely to influence market sentiment in the coming months. Gorakshakar pointed out that a clearer market outlook might emerge in January, after Donald Trump’s inauguration, and that foreign portfolio investors (FPIs) typically reduce activity during the holiday season in December, leading to lower market volumes.

The Indian stock market has shown a smart recovery this morning, but experts suggest caution as external and internal uncertainties remain. The market’s short-term direction is likely to depend on key political events, particularly the Maharashtra election results and global developments.