Nifty, Sensex regain momentum after selloff; Auto, metal stocks rally
India VIX, which assesses market anxiety, also cooled off by about 12 percent to hover around 17. On August 5, given the large selloff, VIX rose as much as 52 percent, the highest since 2015.
After a nearly 3 percent drop triggered by weak global cues and growing recession fears, benchmark indices Nifty and Sensex started the day on a positive note on August 6, bringing relief for investors.
At about 9:30 am, the Sensex was up 1.3 percent to 79,768 while the Nifty edged higher by 1 percent to 24,281. About 2,550 shares advanced, 441 shares fell and 93 were unchanged on the BSE.
The gain in the market also comes on the back of a sharp bounce back in Japanese indexes. The benchmark Nikkei 225 index jumped 10.33 percent, or 3,249.36 points, to 34,707.78, while the broader Topix index added 10.26 percent, or 228.49 points, to 2,455.64.
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The broader market, mainly the mid-small cap indexes, restarted their outperformance of the headline indices after the two gained 1.5 and 2 percent respectively. However, market experts caution about high valuations in the space and suggest money-making would be easier through large-cap companies.
India VIX, which assesses market anxiety, also cooled off by about 12 percent to hover around 17. On August 5, given the large selloff, VIX rose as much as 52 percent, the highest since 2015.
“Going forward, we expect volatility to continue ahead of RBI Policy and multiple global headwinds, including the unwinding of Yen carry trades, recession fears in the US, and escalating tensions in the Middle East. US slowdown is a bigger concern and sooner or later US Fed will bite the bullet of interest rate cuts which should provide relief in the current environment,” says Siddhartha Khemka, Head of Retail Research at Motilal Oswal.
He also added that India stands strong with the support of Healthy macros, strong participation from domestic retail and institutional investors, and inline Q1FY25 numbers so far. The combination of 7 percent GDP growth, 15 percent Nifty earnings CAGR in FY24-26 and stable currency could keep sentiments strong.
Among sectors, the Nifty Auto index rose the most, up over 2 percent, recovering partially from a 4 percent slump yesterday. Tata Motors, M&M, and Maruti Suzuki were the top performers in the index. Nifty Meta and Realty followed next, all trading over 2 percent higher. All 13 sector indices were in the green, data showed.
“After a gap-up opening, Nifty can find support at 24,100 followed by 24,000 and 23,950. On the higher side, 24,300 can be an immediate resistance, followed by 24,400 and 24,500,” Deven Mehata, research analyst at Choice Broking, said. “The charts of Bank Nifty indicate that it may get support at 50,000, followed by 49,800 and 49,700. If the index advances further, 50,500 would be the initial key resistance, followed by 50,600 and 50,800,” he added.
Reliance Industries, Tata Motors, Adani Ports, HDFC Bank, and L&T were the top gainers on the Nifty. State Bank of India, Apollo Hospitals and Cipla were the only laggards on the index.
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