India's share market exhibited a broadly positive undertone Wednesday, with the benchmark indices, BSE Sensex and NSE Nifty, ending marginally higher by 0.5% in absence of any major trigger. The domestic benchmark indices retreated from day’s high levels amid concerns over rising Covid-19 cases in some Asian regions and foreign fund outflows.

The BSE Sensex closed 410 points, or 0.51%, higher at 81,597, after crossing crucial 82,000 mark in intraday trade. Similarly, the NSE Nifty50 settled 130 points, or 0.52%, higher at 24,813, retreating from the day’s highest of 24,946.

The broader market also settled in green, with the Nifty Midcap100, and Nifty Smallcap100 indices gaining 0.78% and 0.38%, respectively.

"Markets exhibited a broadly positive undertone today; however, overall sentiment remained confined within a narrow range, indicating risk of “sell on rallies” strategy in the near future amid escalating uncertainty around India-U.S. trade negotiations. There is a growing perception that India may not derive the anticipated benefits initially projected during the peak of the tariff war, which has since de-escalated,” said Vinod Nair, Head of Research, Geojit Investments.

“FIIs turned net sellers due to the concerns over the recent U.S. credit rating downgrade, tax cut plans in the U.S. that could significantly widen the fiscal deficit, and its effect on the upcoming Fed policy next month. This change in stance hints at an increased probability of emerging risk-averse sentiment in the near term," he added.

The market breadth was positive, with 2,301 out of 4,115 stocks traded on the BSE advancing, while 1,678 ended lower, and 136 remained unchanged.

On the BSE Sensex pack, 24 out of 30 constituent stocks ended in the positive terrain, led by Bajaj Finserv, Tata Steel, Sun Pharma, Tech Mahindra, and Bajaj Finance emerging as top gainers, rising in the range of 1.3-2%. On the other hand, IndusInd Bank, Kotak Mahindra Bank, Power Grid Corporation, ITC, Ultratech Cements, and Maruti Suzuki were among top losers, falling by up to 1.4%.

On the sectoral front, Nifty Realty was the top performer with a 1.7% gain, followed by Nifty Pharma, which climbed 1.3%.  Nifty PSU Bank, Nifty IT, and Nifty Metal were among other notable gainers, while Nifty Consumer Durables was among the top laggards.

Meanwhile, the fear index India VIX, which gauges the volatility in the markets, settled at 17.48 points, marginally higher by 0.52%.

Technically, the Nifty remained confined within the range of the previous session, suggesting that traders are staying on the sidelines awaiting a clear signal, said Rupak De, Senior Technical Analyst at LKP Securities. 

"A fall below 24,700 could trigger a market correction, potentially leading to a decline toward the 21-EMA, which is currently positioned around 24,428. Overall, sentiment is likely to remain sideways to bearish as long as the Nifty stays below 25,000. However, if the Nifty reclaims the 25,000-level, the sentiment may turn bullish, and short bets would lose their appeal," he added.

Ajit Mishra, SVP, Research, Religare Broking, said the recent price action in the Nifty indicates that the bulls are making a strong effort to sustain the prevailing uptrend. “Participants are advised to align their positions accordingly, focusing more on stock selection based on relative strength. Dips should be seen as an opportunity to gradually accumulate quality stocks. Among key sectors, pharma, realty, metals, and banking are preferred, while a selective approach is recommended for the rest."

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