Markets end strong on trade optimism; Sensex gains 540 pts, Nifty reclaims 25,220

Indian equity markets ended higher on Wednesday, buoyed by global optimism following the U.S.-Japan trade agreement. Positive cues from global peers, especially Asian counterparts, along with ongoing progress toward finalising the India-U.K. free trade agreement (FTA) and continued momentum in global trade negotiations, supported overall market sentiment.

The BSE benchmark Sensex surged 540 points, or 0.66%, to close at 82,726.64, while the Nifty jumped 159 points, or 0.63%, to settle at 25,219.90. Underperforming the benchmark indices, the broader market ended with modest gains amid valuation concerns. The Nifty MidCap 100 closed 0.34% higher, while the Nifty SmallCap 100 ended flat.

“While elevated valuations remain a concern, the prevailing market strength indicates potential for near-term earnings recovery. However, the pace and sustainability of this recovery will be critical in shaping the market’s forward trajectory,” said Vinod Nair, Head of Research, Geojit Investments.

During the session, the 30-share BSE Sensex jumped as much as 600 points to hit an intraday high of 82,786.43, while the 50-share NSE Nifty surged 173 points to touch 25,233.50.

On the Sensex, 23 of the 30 stocks ended in the green, led by Tata Motors , Bharti Airtel , Bajaj Finance , Maruti Suzuki , and Bajaj Finserv , which rose between 1% and 2.5%.

Meanwhile, HUL , UltraTech Cement , BEL , ITC , Titan , Tech Mahindra , and Tata Steel were the only laggards, slipping up to 1%.

Sector-wise, Nifty Healthcare and Nifty Auto led the gains, while Nifty Realty and Nifty Media closed in the red, reflecting a mixed sentiment across the broader market.

Overall, the market breadth was marginally weak, with 2,034 stocks declining out of total traded shares of 4,198 on the BSE. On the other hand, 1,997 shares advanced and 167 ended unchanged. A total of 149 stocks hit their 52-week highs and 48 touched 52-week lows. Additionally, 251 stocks were locked in their upper circuit limits, whereas 213 slipped to their lower circuit limits.

The ongoing recovery in the market is driven primarily by strength in banking majors, while heavyweights from other key sectors are showing signs of stabilisation following the recent correction, said Ajit Mishra – SVP, Research, Religare Broking

However, the IT sector, which holds significant weight in the index, continues to face selling pressure and is gradually inching lower. Market participants will closely watch Infosys’ results, as its performance will be crucial in determining the next leg of the move for the IT space, he added.

Nifty closes above 20-day EMA

Technically, the Nifty index maintained a steady upward momentum, ending the session with solid gains. Notably, this marks the first close above its 20-day exponential moving average (EMA) since July 11, a crucial technical indicator often monitored by traders.

“Over the past few sessions, the index had repeatedly tested this moving average but failed to sustain above it. However, Wednesday’s close above the 20-day EMA could signal a potential shift in short-term sentiment,” said Sudeep Shah, Head - Technical and Derivaties Research, SBI Securities.

Talking about crucial levels, Shah said the zone of 25300-25330 will act as an immediate hurdle for the Nifty index. Any sustainable move above the level of 25330 will lead to a sharp upside rally up to the level of 25500, followed by the 25650 level in the short term. While on the downside, the support is shifted higher in the zone of 25100-25070 level.

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