Market Wrap: Sensex, Nifty run towards higher end as Nifty loses break; Key factors behind the relief rally

After surging over 1,000 points intraday, the benchmark BSE Sensex settled just over 200 points on Tuesday, while the Nifty50 closed above 23,500. Gains in HDFC Bank and Mahindra & Mahindra led the indices, with analysts attributing the rise to a short-term relief rally.

The 30-share BSE benchmark Sensex rose 239 points, or 0.31%, to settle at 77,578. The broader NSE Nifty closed up 65 points, or 0.28%, at 23,518. During the session, the Sensex touched an intraday high of 78,451, while the Nifty50 touched 23,780.

All listed companies on BSE have a market capitalization of Rs. 1.3 lakh crore increased to Rs. 430.4 lakh crore has happened.

The Nifty 50 snapped a seven-day losing streak on Tuesday following gains in HDFC Bank and Mahindra & Mahindra, with analysts calling the rise in both benchmarks a short-term relief rally.

Among the Sensex pack, M&M, Tech Mahindra, HDFC Bank, Sun Pharma, Titan and Tata Motors were the top gainers, rising 1.5% to 3.5%. Ultratech Cement, Power Grid and Infosys also closed in the green.

Sectorally, the Nifty Auto, Media, Pharma, Realty and Consumer Durables indices rose over 1% on Tuesday. In the broader markets, Nifty Smallcap 100 and Nifty Midcap 100 also closed around 1% higher.

1) Global brokerages turn positive on India
Global brokerages CLSA, Citi and HSBC have recently shifted their focus from China to India due to adverse economic conditions. For example, CLSA decided to reverse its earlier move from India to China, citing growing concerns over the Chinese economy and investor sentiment.

The brokerage firm points to a resurgence of trade tensions, particularly under a “Trump 2.0” scenario, which could escalate a trade war at a time when exports have become a key driver of China’s economy.

Meanwhile, despite festive demand across sectors, Citi remains confident of India’s position, maintaining a 20% overweight allocation to the country.

Amid global uncertainties, Citi has changed its strategic allocation strategy since early October. The firm re..

Amid global uncertainties, Citi has changed its strategic allocation strategy since early October. The company has reduced its overweight position on China to benchmark levels while doubling down on India with a 20% overweight allocation.

HSBC is bullish on India, maintaining an “overweight” stance with the Sensex year-end target of 90,520 for 2025, suggesting a 15% upside from current levels. While growth in India appears to be settling at a slightly slower but still comfortable pace, specific risks and challenges for equity markets remain evident.

2) China ends export tax exemptions for key commodities
China has announced sweeping changes to its export taxes effective December 1 for key commodities including aluminum, copper and oil products. The developments boosted sentiment in the Indian commodity market, with the Nifty metal index rising nearly 2% during Monday’s session. Trade However, the index faced some profit booking on Tuesday despite rising 0.86% during intraday trading.

In a statement on November 15, China’s finance ministry said that starting next month, it will end tax breaks for exports of products spanning aluminum, copper and biofuel feedstocks, which previously benefited from a 13% rebate on export duty.

3) Buying a dip
With the Nifty index down over 10% from its recent peak, equity markets rallied today as investors pounced on opportunities after the recent decline. The mid-cap and small-cap indices have experienced sharper improvements, around 12% and 11.5% respectively.

Meanwhile, the benchmark closed up just 0.3%, despite gaining more than 1.4% during the day.

“The strong bounce back due to bottom fishing was short-lived as caution prevailed in the market. Investors took every opportunity to book profits amid continued FII sales and weak Q2 earnings,” said Vinod Nair, head of research at Geojit Financial Services. .

4) Technical view
The Nifty closed lower yesterday, its seventh straight daily loss. The last time that happened was in February 2023, which led to a relief rally and historically looking at the last decade, such down streaks mostly lead the market to recover over the next 5 days.

Rupak De, Senior Technical Analyst, LKP Securities said, “The Nifty remained volatile throughout the session due to the sudden rise in geopolitical tensions between Russia and Ukraine, which once again pushed the index below its 200-day moving average (DMA). Technical On the front, the Nifty managed to hold above its recent lows, till it touched 23,350. It indicates a possible bullish reversal until it breaks the level, on the contrary, if the index stays above the 23,500 level, it may move towards the 23,700-23,800 zone.”

5) Global market

Government bonds and the Japanese yen rose on Tuesday as investors flocked to safe-haven assets after President Vladimir Putin updated Russia’s nuclear doctrine amid rising tensions with the United States over Ukraine.

Putin said Russia could consider using nuclear weapons if it was subjected to a conventional missile attack backed by nuclear power, after the United States allowed Ukraine to fire American-made long-range missiles into Russia.

European shares extended losses, sending the region-wide STOXX 600 index down 1% to a more than three-month low. A gauge of euro zone equity volatility rose more than three points to a two-week high. US stock futures fell, with the S&P 500 down 0.5%.