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Sensex, Nifty up 2% as bulls clutch D-Street, India VIX down 6%; what’s fueling the rally today?

Domestic equity market benchmarks BSE Sensex and NSE Nifty 50 jumped over 2 per cent intra day on Monday riding on a firm global momentum

Stock market, BSE Sensex, Nifty 50
The Indian benchmark indices were witnessing a short covering and technical pull back rally. Image: Reuters

Domestic equity market benchmarks BSE Sensex and NSE Nifty 50 jumped over 2 per cent intra day on Monday riding on a firm global momentum. BSE Sensex hit a day’s high of 56,082.65, and Nifty 50 rose to 16,695.50. In today’s trading session, both domestic and global markets witnessed a sharp bounce back. Index heavyweights such as Reliance Industries Ltd (RIL), Infosys, Tata Consultancy Services (TCS), Housing Development Finance Corporation (HDFC), and L&T, among others contributed the most to the indices’ gain on Monday. India VIX, Nifty’s volatility index, which indicates the degree of volatility traders expect over the next 30 days in the Nifty 50 index, was down 6.23 per cent to 20.14 levels. On the sectoral front, Nifty Bank was up nearly a per cent. Broader markets, S&P BSE MidCap and S&P BSE SmallCap, were also performing inline with equity frontliners.  

What’s fueling the rally on D-Street?

Advances have been witnessed across sectors, being further aided by improvement in global investor sentiments on the back of news that Shanghai would ease Covid-19 restrictions, Aamar Deo, Singjh, Head Advisory, Angle One, told FinancialExpress.com. Markets had witnessed a sharp sell-off for the past few weeks, so a healthy bounce back is definitely desirable. “The recent lows should now act as crucial support, for Nifty the support is around 15600-15700 zone whereas immediate resistance is around 16500-16600 zone,” he added.

Rajesh Palviya, VP – Research (Head Technical & Derivative) Axis Securities told FinancialExpress.com that Nity 50 index managed to cross the 16400 in early trade on Monday, which triggered the short covering. Nifty IT index also displayed short covering which also added the momentum in Nifty 50 and BSE Sensex. “If Nifty continues to trade above 16500 then it may scale up towards 16700-16800 level in near term . We expect Automobile, IT, Banking and Capital Goods may continue to show bullishness in near term,” Palviya added.

The Indian benchmark indices were witnessing a short covering and technical pull back rally after breaking the crucial resistance of 16400 levels in Nifty 50 index. Ravi Singh, VP & Head of Research, Share India Securities, told FinancialExpress.com that Nifty may go up to 17000 in coming trading sessions. “Majorly IT, Auto, Bank and Power were undergoing volume accumulation from lower levels and may outperform the index in this rally,” Singh added.

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