Sensex Rallies 600 Pts, Nifty Hits 24,800 as IT Leads Market Rebound

Nifty Surges Past 24,800, Sensex Rallies Nearly 600 Points as IT and FMCG Stocks Lead Rebound

Indian equity benchmarks regained ground on May 23, rebounding strongly from the previous session’s losses driven by global bond market jitters. The Sensex jumped 597 points to 81,549.05, while the Nifty climbed 194.50 points to 24,804.20, as investors appeared to shrug off concerns about the U.S. fiscal deficit and bond yield volatility. Gains were led by IT and FMCG stocks, while pharma and healthcare counters lagged. The India VIX cooled by 150 basis points, easing market volatility.

Highlights:

• Sensex up 597 points (0.74%) to 81,549.05; Nifty gains 194.50 points (0.79%) to 24,804.20.

• India VIX slips 150 bps, signaling reduced market volatility.

• Market breadth positive: 1,916 stocks advanced, 1,059 declined, 166 unchanged.

• Nifty Midcap 100 falls 0.2%, Smallcap index down 0.4%.

• IT, FMCG stocks lead; Pharma, Healthcare decline.

Market Sentiment Stabilizes as Bond Yields Ease Marginally

Following Thursday’s rout triggered by surging global bond yields, Indian markets opened higher on Friday as yields saw a slight dip, restoring some investor confidence. Despite foreign institutional investors (FIIs) pulling out over Rs 5,045 crore in equities on May 22, domestic institutions (DIIs) supported the market with net purchases worth Rs 3,715 crore, balancing sentiment.

While the broader markets remained mildly negative, frontline stocks found support, especially in consumer staples and IT, as sector-specific cues drove selective buying. The dip in India VIX further underscored the shift in market tone toward cautious optimism.

Highlights:

• FIIs net sellers of Rs 5,045 crore; DIIs net buyers of Rs 3,715 crore.

• Global bond yield tension eases, calming equity markets.

• Institutional activity reflects diverging sentiment between FIIs and DIIs.

Sectoral Snapshot: IT and FMCG Shine, Pharma Slips

The Nifty IT index surged, lifted by Bernstein’s bullish view on Indian software exporters, boosting top players like Infosys and TCS. The FMCG pack also rallied, with ITC leading the charge following a strong Q4 performance. On the other hand, Pharma and Healthcare stocks declined, with Nifty Pharma falling 1.5%, reflecting profit booking and sector rotation.

The sectoral divergence highlighted an ongoing reallocation of capital towards relatively defensive and high-visibility earnings pockets amid uncertain global cues. Despite the gains, investors remained selective, focusing on quality and resilience.

Highlights:

• Nifty IT rises on Bernstein’s positive outlook.

• ITC drives FMCG rally post robust Q4 earnings.

• Nifty Pharma declines up to 1.5% on profit booking.

Global Market Overview: Mixed Cues from Wall Street and Asia

Overnight, Wall Street indices ended flat, as traders remained cautious following the passage of President Trump’s tax and spending bill in the U.S. House of Representatives, fueling worries about rising debt servicing costs. The 30-year U.S. Treasury yield reached its highest level since October 2023, keeping equity investors wary.

Asian markets opened higher, with the Nikkei 225 up 1% and Hang Seng rising 0.4%, signaling a cooling of U.S. fiscal concerns. Chinese indices reversed early losses, helping stabilize regional sentiment and offering cues for risk-on flows into emerging markets.

Highlights:

• U.S. 30-year bond yield hits highest since Oct 2023.

• Dow, S&P 500 flat; Nasdaq gains 0.28%.

• Nikkei 225, Kospi, Hang Seng, and Shanghai indices advance.

Technical Indicators: Resistance at 24,850; Support Seen at 24,450

According to Kotak Securities, the intraday market texture remains weak, and further selling could occur if Nifty slips below the 24,450 mark, a key technical support and 20-day SMA. On the higher end, a break above 24,850 could trigger an extended rally toward 24,900.

The Nifty’s current positioning around 24,800 indicates a battle between bulls and bears, with traders closely watching resistance levels for signs of a breakout or fresh reversal. Until then, a sideways to cautious approach is expected to prevail.

Highlights:

• Resistance zones: 24,650–24,750; breakout may extend rally to 24,900.

• Support zones: 24,450, followed by 24,380–24,165 if breakdown occurs.

• Intraday momentum weak despite headline gains.

Derivatives Outlook: FPI Short Positions Signal Cautious Undertone

In the F&O market, foreign portfolio investors continue to accumulate short positions, suggesting persistent caution despite Friday’s gains. Analysts note that the inability to breach the 24,850 level may turn any rebound into a bear trap, with traders likely to add to their short bets at resistance bands.

Dhupesh Dhameja of SAMCO Securities warned that unless Nifty convincingly breaks above recent resistance, the larger trend remains murky and vulnerable to downside risk, and any rallies may be short-lived in the absence of broader conviction.

Highlights:

• FPIs building short positions in index futures.

• 24,800–24,850 remains a crucial ceiling for upside momentum.

• Bear traps possible if resistance not breached convincingly.

Market Strategy: Focus on Domestic Demand and Strong Macros

Despite global volatility, India’s resilient macroeconomic fundamentals, declining inflation, and stable interest rate outlook remain key positives. VK Vijayakumar of Geojit Investments said that sectors like financials, telecom, and aviation—driven by domestic demand—are likely to outperform in uncertain times.

Stocks like ICICI Bank, Bharti Airtel, and InterGlobe Aviation have shown consistent strength, signaling investor preference for structurally sound plays with growth visibility. This domestic insulation could cushion Indian markets even if global sentiment stays weak.

Highlights:

• Domestic macro stability offers a cushion against global headwinds.

• Focus shifts to financials, telecom, and aviation for sustained outperformance.

• Structural strength in domestic-demand driven sectors.