Nifty Bounces Back: A Look at Tuesday’s Market Recovery and Key Stock Movements

Keywords: Nifty recovery, stock market analysis, market trends, short-covering, financial services, sectoral gains

The Nifty was struggling, with the market testing the lows seen on Monday. However, by the end of the session, a stunning reversal had taken place, and we saw gains on the Nifty index that had many market participants rethinking their predictions.

During the early part of the session, the Nifty fell to a low of 23,842, flirting with the possibility of further downside. The turning point came when the Nifty Bank index sparked a recovery, with short-covering triggered by oversold setups. By the close of the session, the Nifty had surged back above the 24,200 level, while the Nifty Bank, after dropping briefly below 51,000 in intraday trading, bounced back sharply to surpass 52,200.

Key Recovery Stats:

• Nifty: 370-point recovery (1.55%)
• Nifty Bank: 1,341-point recovery (2.64%)
• Nifty Midcap: 924-point recovery (1.7%)
• Nifty Smallcap: 254-point recovery (1.4%)

The overall market saw a significant recovery, with most sectoral indices reversing their losses, except for FMCG and Media. Sectors like Metals, which had shown resilience even in the weaker market conditions earlier, led the recovery, ending as one of the top gainers. PSU Banks also saw sustained buying interest, with investors eyeing results from the State Bank of India later this week.

Despite the day’s recovery, the Nifty remains within a trading range between 23,800 and 24,300. A decisive move above the 24,300 mark will be crucial for confirming a sustained uptrend.

Global and Domestic Catalysts

As the US Presidential Election results began to unfold, the market’s sentiment was also influenced by the uncertainty surrounding the outcome. Polls indicated a tight race between Donald Trump and Kamala Harris, and the results would play a crucial role in shaping global market sentiment in the coming days.

On the domestic front, Foreign Institutional Investors (FIIs) continued to be net sellers, offloading ₹2,569 crore in equities. However, Domestic Institutional Investors (DIIs) outpaced FIIs for the second consecutive day, showing strength in local buying.

Earnings Reactions and Key Stock Movements

The stock market also had its eyes on earnings, with companies like Dr. Reddy’s and Titan reporting results after market hours on Tuesday. Other notable earnings reactions were expected from GAIL, Oil India, Mankind Pharma, and Manappuram Finance.

For Wednesday’s session, traders will be looking for reactions from companies like Tata Steel, Power Grid, and other broader market names such as Delta Corp, Endurance Technologies, and JSPL.

F&O Cues and Key Stocks to Watch

• Several stocks saw fresh long positions being built, signaling positive sentiment for the upcoming session:
• NALCO (+1.80% Price Change, +16.84% OI Change)
• SBI (+2.09% Price Change, +10.86% OI Change)
• Manappuram Finance (+3.86% Price Change, +9.33% OI Change)

On the other hand, short positions were evident in stocks like ABB India, Mahanagar Gas, and IndiaMART, suggesting weakness in these counters.

Key Stocks to Watch for Wednesday:

• Hindustan Zinc: The government will divest 1.25% equity in the company through an offer for sale (OFS).
• HeroMoto Corp: Expansion plans for Europe and UK markets.
• Manappuram Finance: Strong Q2 results with net profit growing by 2%, while its NPA ratio saw an increase.
• GAIL: Reported a slight increase in net profit, with revenue slightly missing estimates.

In summary, while the Nifty has bounced back strongly, it remains in a consolidation phase. Traders should remain cautious around key levels like 24,300, with the possibility of further upside if those levels are breached. However, any pullback could lead to a retest of the 23,800-23,900 range. Keep an eye on earnings reactions and global developments, especially the US election outcome, which could influence market trends over the next few days.

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