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Stock market recap: Benchmark equity indices Sensex and Nifty rose for a second consecutive session on Friday, buoyed by strong buying in IT stocks and earnings-led gains in Trent, the Tata Group’s retail arm.
The Sensex gained 308.49 points, or 0.42%, to close at 74,459.53, while Nifty 50 advanced 116.35 points, or 0.51%, to settle at 23,053.10.
For the week, the Sensex rose 1.8% and the Nifty 50 2%. The recovery helped the Sensex finish October 2.7% higher, ending a two-month losing streak after declines of 5.8% in September and 1.5% in August. The Nifty rose 1.9% in October, after declining 6.1% in September and 1.2% in August.
Foreign portfolio investors bought more than ₹14,000 crore of equities during the week, including primary-market investments. Domestic institutional investors bought another ₹7,062 crore. Indian equities found dual triggers this week as the country's largest IPO, Jio Platforms, delivered a strong debut, listing at 21.4% above its issue price. Meanwhile, the market found some solace as the US Federal Reserve held interest rates steady, though it maintained its caution on inflation.
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Buy: Coforge Ltd (current price: ₹2,045)
Buy: Sai Life Sciences Ltd (current price: ₹1,557)
Indian equity markets ended Friday’s session higher, with the Nifty 50 gaining 116.35 points, or 0.51%, to close at 23,053.10. The index recovered from an intraday low of 22,905.10 and touched a high of 23,118.10. However, gains in the benchmark masked weakness in the broader market. A total of 1,013 stocks advanced, 2,511 declined and 109 remained unchanged, taking the advance-decline ratio to approximately 0.40:1.
Sectoral performance was mixed. Nifty IT led the gains, rising 2.32%, followed by Healthcare (1.58%), Pharma (1.55%) and Media (1.46%). Consumer Durables fell 1.78%, while Financial Services Ex-Bank declined 1.04%, PSU Bank 0.93% and Auto 0.87%.
The Nifty formed a bullish daily candle, extending its recovery from recent lows and reclaiming its short-term moving average (20-DMA). The price action points to improving buying momentum, with the index attempting to form a higher low. However, the broader trend remains cautious, as the benchmark continues to trade below its 50-day, 100-day and 200-day moving averages, indicating an underlying bearish structure.
Momentum indicators also showed signs of improvement. The Relative Strength Index (RSI) recovered to 53.50, moving above the neutral 50 mark and its signal average of 45.97, suggesting strengthening bullish momentum without entering overbought territory. The Moving Average Convergence Divergence (MACD) registered a bullish crossover, with a positive histogram pointing to improving upward momentum. However, both the MACD and signal lines remain below the zero line.
The Nifty’s close above its 21-day moving average (21-DMA) signals renewed buying interest and an improvement in near-term sentiment. On the downside, the 22,500-22,400 range remains a crucial support zone. A decisive break below it could invite fresh selling pressure and drag the index towards 22,200-22,000.
On the upside, the 23,000-23,200 range is likely to pose a significant resistance, given the index’s recent breakdown from these levels.
Nifty Bank opened lower at 54,175.60, against the previous close of 54,267.40, but recovered steadily after hitting an intraday low of 54,047.90. The index climbed to a high of 54,980.15 before settling at 54,909.65, up 642.25 points, or 1.18%.
The session formed a strong bullish candle, taking the index back above its 21-day moving average (21-DMA). This was the second consecutive session of gains from the 53,500-54,000 demand zone, raising the possibility of a double-bottom formation. Among heavyweight constituents, Kotak Mahindra Bank led the gains, rising 4.32%, followed by State Bank of India (1.58%) and ICICI Bank (0.65%). HDFC Bank was the only major heavyweight to end lower, slipping 0.29%. Yes Bank fell 1.15%, while IDFC First Bank declined 0.20%.
Momentum indicators suggest that selling pressure is easing, although the broader trend remains weak. The Relative Strength Index (RSI) rose to 47.06, moving above its signal average of 44.25, but remained below the key 50 mark. The RSI also formed a higher low even as the price registered a lower low, indicating mild positive divergence and lending support to the potential bottom formation.
The Moving Average Convergence Divergence (MACD) stood at -388.39, marginally below its signal line at -381.73. However, the histogram narrowed to -6.66, suggesting that a bullish crossover could be approaching. Both indicators remain in negative territory, underscoring the weakness in the broader trend.
The index continues to trade below its 50-day, 100-day and 200-day moving averages. The 100-DMA has also slipped below the 200-DMA, reinforcing the bearish medium- to long-term outlook. For now, the rebound appears to be a recovery within a broader downtrend rather than a confirmed trend reversal.
On the downside, 54,050 is the immediate support, close to Thursday's intraday low, followed by the swing low around 53,500. A break below 53,500 would undermine the potential double-bottom formation. On the upside, 55,000 is the first hurdle. A sustained move above this level could bring the 50-DMA near 56,000 into focus, followed by the 100-DMA and 200-DMA cluster around 56,700.
The macroeconomic backdrop has improved, with the US Federal Reserve holding interest rates steady and banks reporting healthy second-quarter results. Kotak Mahindra Bank, for instance, reported a 26% increase in consolidated profit. However, Brent crude prices near $115 a barrel remain a key risk.
A close above 55,000 could extend the recovery towards 56,000. Failure to clear this resistance, however, could keep the index range-bound between 54,000 and 55,000.
MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.
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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
MarketSmith India breaks through the market clutter to bring actionable investment ideas into focus. Our founder and legendary investor, William J. O'Neil, studied these trends and formulated the pathbreaking methodology, the CAN SLIM®. For over five decades now, MarketSmith has been successfully delivering great investment ideas based on its investment philosophy.
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