Indian Markets Rally After Historic Losing Streak; Analysts Caution on Sustainability
Indian stock markets staged a strong rebound on March 5, snapping a historic 10-day losing streak, as broad-based buying lifted benchmark indices. The rally was led by metal, power, and IT stocks, with investors hunting for value after an extended period of weakness.
The BSE Sensex jumped 660 points to trade above 73,500, while the Nifty 50 climbed past the 22,300 mark, driven by gains in Adani Ports, Tata Steel, Mahindra & Mahindra (M&M), and Power Grid Corporation. However, some index heavyweights such as Bajaj Finance, HDFC Bank, and Grasim Industries faced selling pressure.
At 2:21 PM, the Sensex surged 594.24 points (0.81%) to 73,584.17, while the Nifty gained 212.60 points (0.96%) to 22,295.25. Market breadth was overwhelmingly positive, with 2,958 stocks advancing, 628 declining, and 70 remaining unchanged.
Despite the sharp recovery, analysts remain skeptical about whether this is a sustainable reversal or just a temporary bounce.
Factors Behind the Market Rally
1. All Sectoral Indices in Green; Metals and Power Lead Gains
- All 13 major sectoral indices were trading in the green, with the Nifty Metal, Nifty Power, and Nifty IT indices rising over 3% each.
- BSE Midcap and Smallcap indices surged over 2%, indicating broad-based buying interest.
- Adani Ports, Power Grid Corp, M&M, NTPC, and Adani Enterprises were the top gainers, climbing between 4-5%.
2. Global Cues and Short-Covering Fuel the Recovery
The rebound in Indian markets mirrored gains in global equities, as investors covered short positions following sharp corrections.
- Global stock markets steadied after a week of trade-related uncertainty, as traders sought to capitalize on oversold conditions.
- Asian markets, particularly Hong Kong’s Hang Seng and Japan’s Nikkei, posted strong gains, further boosting sentiment in India.
- Short-covering by institutional investors also played a role, as traders rushed to unwind bearish bets.
3. IT, Autos, and Metals Drive Upmove
- Information technology, auto, and metal stocks led the charge, helping the Nifty stage a nearly 1% intraday gain.
- Tech stocks rebounded on strong deal momentum, with TCS, Infosys, and HCL Tech gaining 2-3%.
- Tata Steel and Hindalco rallied sharply as global metal prices rebounded, signaling a possible turnaround in the commodity cycle.
- Auto stocks, including M&M and Tata Motors, saw renewed buying interest amid expectations of strong volume growth.
4. Analysts Remain Cautious Despite Rebound
While the recovery is a welcome relief for investors, market experts warn that the rebound lacks strength and may not sustain without fresh triggers.
- Kranthi Bathini, Director at WealthMills Securities, advised caution, stating that the Nifty needs to break above 23,000 for sentiment to shift decisively.
- Shrikant Chouhan, Head of Equity Research at Kotak Securities, highlighted critical support levels, noting that:
- Nifty is hovering near key zones of 22,000 and 21,800.
- A close below 21,800 could trigger fresh selling, pushing the index towards 21,500.
- Immediate resistance stands at 22,500, and crossing this level could drive a further upmove.
5. US Tariffs Spark Concerns Over Global Trade War
Despite today’s rally, global uncertainties continue to loom over financial markets, particularly concerning trade disputes.
- US President Donald Trump has imposed a fresh 25% tariff on imports from Canada and Mexico, escalating trade tensions.
- Chinese goods now face a total duty of 20% after an additional 10% levy, prompting retaliatory tariffs from China and Canada.
- Trump has also threatened further tariffs starting April 2, raising fears that India could be next in line for trade restrictions.
- If these tariffs drive up inflation in the US, the Federal Reserve may keep interest rates high for an extended period, potentially curbing foreign investment into emerging markets like India.
Stock-Specific Developments
1. BSE Ltd Shares Plunge 9% After NSE Revises F&O Expiry Rules
- Shares of BSE Ltd fell 9% after the National Stock Exchange (NSE) announced a major shift in the expiry of futures and options (F&O) contracts.
- Starting April 4, all Nifty index weekly F&O contracts will expire on Mondays instead of Thursdays.
- The monthly expiry of all Nifty contracts has also been moved to the last Monday of the expiry month.
2. Granules India Drops 3% After US FDA Warning
- Granules India’s stock slid 3% after the US FDA issued a warning letter highlighting serious lapses at its Gagillapur facility.
- The unit accounts for nearly 70% of the company’s revenue, and a potential import ban could severely impact earnings.
3. Coforge Soars 10% on Big Deals and Stock Split
- IT firm Coforge jumped over 10% after announcing two acquisitions, a major long-term deal, and a stock split.
- The company secured a $1.56 billion, 13-year deal with US-based Sabre Technologies, focusing on AI-powered solutions.
Market Outlook: Short-Term Relief or Sustainable Rally?
- The market’s sharp rebound suggests temporary relief, but the sustainability of this rally remains uncertain.
- Key resistance levels stand at 22,500 on the Nifty, and a break above this could fuel further gains.
- If global uncertainties persist, the Nifty could retest support levels near 21,800 and 21,500.
- Investors are advised to focus on fundamentally strong stocks and adopt a cautious approach amid ongoing global volatility.
A Temporary Respite or the Start of a New Uptrend?
The Indian stock market finally broke its 10-day losing streak, bringing much-needed relief to investors. However, with global trade tensions still unresolved, uncertainty looms over the sustainability of this upmove.
- While value buying and sectoral strength have provided near-term support, markets will need strong global cues and sustained buying momentum to continue the rally.
- As global trade policies, interest rate expectations, and earnings season unfold, investors should stay vigilant and adopt a stock-specific approach.
- The next few sessions will be crucial in determining whether this is just a short-term bounce or the beginning of a sustained recovery in Dalal Street.
