Market logs biggest 1-day gain in a month; what fuelled rally in Sensex, Nifty?

In a major pullback rally, Indian equities closed 1.5% higher on Tuesday – the biggest single-day rally in more than a month – driven by firm global cues amid easing concerns about U.S. recession. Improved retail sales data from the U.S. and China boosted investor confidence about global economic growth, while improving domestic fundamental further lifted sentiments.

Extending gains for the second straight session, the BSE benchmark Sensex settled at 75,301.26, up 1,131 points or 1.53%. Similarly, the NSE Nifty50 closed 325 points, or 1.45%, higher at 22,834.

On the BSE Sensex pack, 26 out of 30 constituents ended in positive terrain, with Zomato, ICICI Bank, M&M, Tata Motors, and L&T leading the chart, gaining in the range of 3-7%. Bucking the trend, Reliance Industries, Tech Mahindra, Bharti Airtel, and Bajaj Finserv ended in red with marginal losses, falling between 0.15-1.4%.

The market witnessed broad-based rally, with mid- and small-cap indices surging over 2%. Outperforming in the benchmark indices, the Nifty Smallcap100 index surged 2.71%, while the Nifty Midcapcap100 jumped 2.10%.

On the sectoral front, all indices settled in green zone, led by Nifty Realty and Media indices, which surged over 3% each. Among others, Nifty Auto, PSU Bank, Metal, and Consumer Durables also witnessed strong buying, rising over 2% each.

Favourable global trends boosted sentiments

The domestic benchmarks witnessed a strong recovery, driven by favourable global trends and domestic tail winds, said Vinod Nair, Head of Research, Geojit Financial Services. The improved retail sales data from the US and China boosted investor confidence, while mid- and small-cap stocks outperformed, with all major sectors registering gains.

The rebound in U.S. retail sales to 0.2% in February, albeit falling short of expectations, eased investors' nerves who were worried about weakening economic growth. While Asian markets continued their positive momentum for the second session as sentiments were lifted by growing optimism over China’s economy.

“The anticipated rebound in domestic earnings, along with a recent decline in the dollar index and lower crude prices, is expected to support this recovery. However, continued FII outflows, driven by higher risk-free rates and the appeal of markets like China—along with tariff uncertainties, keep investors cautious during this phase," he added.

Technically, after a long consolidation, the Niftty50 and Sensex successfully surpassed the 22,600 and 74500-resistance zone today. Additionally, the market is currently trading comfortably above the 20-day SMA (Simple Moving Average), which also indicates a further uptrend from current levels. “We believe that the short-term market outlook is bullish; but for day traders, buying on intraday corrections and selling on rallies would be the ideal strategy,” said Shrikant Chouhan, Head Equity Research, Kotak Securities.

“In the near future, 22,700/75000 and 22,600/74500 will act as key support zones for Nifty and Sensex, while 22,950/75600 and 23,000/75800 could serve as profit-booking areas for day traders,” he added.

Looking ahead, the alignment between the benchmark index and banking majors supports further recovery, with Nifty eyeing the 23,100 level, said Ajit Mishra – SVP, Research, Religare Broking Ltd. However, global factors such as the Federal Reserve meeting and geopolitical uncertainties may introduce intermittent volatility. “A 'buy on dips' strategy remains prudent, with a focus on sectors/themes that align with the prevailing market trend," he said.

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