Sensex, Nifty rebound amid caution; markets recover from sharp sell-off

Indian equity markets recovered on Friday after a sharp sell-off, with Sensex closing up 315 points and Nifty 50 gaining 77 points. The rebound was driven by selective value buying, but caution remains due to high crude prices and FII selling.

The domestic equity markets closed higher on Friday with benchmark indices recovering from the previous session's sharp sell-off as selective value buying supported sentiment. The Nifty 50 index closed at 23,140.50, gaining 77.40 points or 0.34 per cent, while the BSE Sensex closed at 73,895.74, up 315.20 points or 0.43 per cent.

Measured Recovery Amid Caution

Market participants, however, remained cautious as crude prices continued to stay elevated, US Treasury yields remained above 5 per cent, and foreign investors continued to sell Indian equities. Vikram Kasat, Chief Business Officer – Advisory and Dealing at PL Capital, said the market's recovery was measured following Thursday's sharp decline. "Indian equities attempted a measured recovery today after Thursday's sharp sell-off. The rebound has been driven more by easing crude prices and selective value buying than by a broad improvement in risk appetite," Kasat said. Brent crude oil prices declined 1.38 per cent to USD 105 per barrel at the time of reporting, still elevated from the average price. The divergence between large-cap stocks and weaker mid- and small-cap stocks also indicated that investors continued to remain selective, Kasat said.

Sectoral Performance

On the sectoral front, most NSE indices ended higher. Nifty Auto gained 0.84 per cent, while Nifty FMCG rose 0.26 per cent. Nifty Metal also gained 0.28 per cent, Nifty PSU Bank increased 0.13 per cent, and Nifty Private Bank advanced 0.26 per cent. On the other hand, Nifty IT declined 0.28 per cent, Nifty Media fell 0.23 per cent, Nifty Pharma declined 0.21 per cent, and the Nifty Oil & Gas index slipped 0.23 per cent.

Market Outlook and Key Factors

Kasat said the sustainability of the market recovery would depend on crude prices stabilising, global yields cooling and selling pressure from foreign investors moderating. "Until then, volatility is likely to remain elevated," he said.

Commodities and Asian Markets

In the commodities market, gold prices rose 0.42 per cent to Rs 1,51,336 per 10 grams for 24 karats, while silver prices gained 1.09 per cent to Rs 2,36,022 per kg at the time of reporting. Asian markets ended mixed on Friday. Japan's Nikkei 225 index gained 1.22 per cent to close at 66,320, while Singapore's Straits Times index rose 0.49 per cent to close at 5,711. Hong Kong's Hang Seng index declined 1.21 per cent to close at 24,465. Markets in Taiwan and South Korea remained closed for a holiday.

Expert Commentary on Market Volatility

Vinod Nair, Head of Research, Geojit Investments, said volatile crude and bond yields at elevated levels kept the market recovery capped. “Concerns over inflation, foreign fund outflows and pressure on EM currencies remained intact. Selective bargain hunting after the recent pullback helped the market retain a positive bias, though gains remained confined to a narrow trading range".

Going ahead, the market's direction is expected to remain sensitive to movements in crude oil, global bond yields and foreign investor flows, with volatility likely to remain elevated until these macro pressures ease. (ANI)

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