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The Indian stock market experienced a significant surge on Tuesday, with the Sensex and Nifty indices reaching historical peaks. Driven by a rally in metal stocks, the Sensex crossed the 85,000 mark for the first time, while the Nifty breached the 26,000 level intraday. Although both indices ended the session with a slight dip, the day's performance highlights the robust momentum prevailing in the Indian market. The market cap of BSE-listed firms stood at a staggering Rs 476.07 lakh crore, further underscoring the growth witnessed.
The rally was primarily fueled by positive global sentiment, influenced by the US Federal Reserve's aggressive rate cut and China's central bank's rate cut and stimulus measures. This positive outlook resulted in gains for domestic metal stocks, while FMCG and banking sectors saw declines due to profit-booking at higher levels. Experts anticipate strong inflows from foreign institutional investors (FIIs) in the near term, driven by the US Fed's dovish outlook and expectations of a rate cut by the Reserve Bank of India (RBI) in October. This positive flow of funds is expected to sustain the market's upward momentum.
Despite the record-breaking highs, analysts maintain a cautious stance, advocating for a consolidation phase with a positive bias. They emphasize the importance of selective stock picking and utilizing dips to accumulate quality stocks. The Nifty is seen holding strong support around the 25,600-25,800 zone, indicating potential for future growth. The technical outlook of the Nifty suggests a period of indecisiveness between bulls and bears, with a break above the 26,000 level required to sustain the rally. Short-term sentiment remains positive, but range-bound movement is expected in the coming days as the index fluctuates between 25,800 and 26,000. While the market's short-term texture remains positive, temporary overbought conditions may lead to range-bound activity in the near future. Key support zones for the bulls are at 25,850-25,800 for Nifty and 84,600-84,500 for Sensex, while key profit booking areas for day traders are at 26,050-26,100 for Nifty and 85,300-85,500 for Sensex. A decline below 25,800 or 84,500 could signal vulnerability in the uptrend.
Source: Stock market: Historic highs for Sensex, Nifty today; should you buy on dips?