Stock market today: Why BSE Sensex climbed over 900 points from day’s low – top reasons for recovery

Stock market today: BSE Sensex and Nifty50, the Indian benchmark indices, witnessed a strong recovery today, bouncing back from the day’s low due to increased buying activity in banks, auto, and IT sectors. Reliance Industries (RIL), a heavyweight in the market, also saw its shares rise by over 1%, contributing to the overall upward movement of the stock market benchmarks.
BSE Sensex closed the trading day on Thursday at 70,865.10, up over 350 points or 0.51%.Nifty50 closed the day at 21,255.05, up over 100 points or 0.50%.
The S&P BSE Sensex surged by more than 900 points from its intra-day low of 69,920, while the Nifty climbed by 300 points to reach a high of 21,288. HDFC Bank and RIL were the top contributors to the index, followed by Infosys.
Despite this recovery, experts warn that mid and small-cap stocks remain vulnerable to correction due to their high valuations. On the other hand, large-cap stocks are expected to see buying interest during declines. VK Vijaykumar of Geojit Financial advises investors to wait for the market to stabilize and consider investing in high-quality large-cap stocks during these declines.

The market breadth turned positive, with 34 stocks trading in the green, 15 in the red, and one remaining unchanged, according to an ET report. The top gainers were Power Grid, Britannia Industries, Bharat Petroleum Corporation (BPCL), RIL, and LTIMindtree. Meanwhile, Axis Bank, Bajaj Auto, Cipla, SBI Life, and ICICI Bank were among the top losers.

Why stock market recovered today

1) Bond Yields: US yields continued to ease, with the 10-year yield reaching its lowest level in nearly five months at 3.85%. This decline in yields, coupled with expectations of early interest rate cuts by the US Federal Reserve, boosted market sentiment. Indian government bond yields also experienced a marginal easing on Thursday.
2) Global Markets: Despite significant losses on Wednesday, US stock futures showed slight gains on Thursday. S&P 500 futures rose by 0.39%, Nasdaq 100 futures advanced by 0.48%, and futures connected to the Dow Jones climbed by 0.4%. Major Asian indices, including the Shanghai Composite, Hang Seng, and Singapore’s FTSE Straits Times Index, were trading in the green, which further contributed to the positive sentiment in the domestic equities market.
3) Buying Action: The recovery was driven by increased buying activity in banks, IT, and auto sectors, which hold significant weight in the Sensex and Nifty indices. All three indices were trading in positive territory, with IT stocks leading the way. Out of the 10 stocks in the Nifty IT index, eight were trading in the green.

According to Sudeep Shah, Deputy Vice President & Head of Technical and Derivative Research Desk at SBI Securities, the Nifty experienced its largest correction in nine months on Wednesday, ending the session 1.41% lower.
Shah suggests that the support level of 20,990-20,970 will be crucial, and as long as it holds, the index may move towards the 21,260-21,280 range. If the index surpasses 21,280, it could reach the 21,330-21,350 zone. However, a breakdown and sustained trading below 20,970 may lead to a further correction towards 20,870-20,850.