The Indian stock market experienced a remarkable surge on Monday, fueled by a significant ceasefire agreement between India and Pakistan. This positive development led to a strong gap-up opening for key indices, with the Nifty 50 kicking off at 24,420 and skyrocketing to an intraday peak of 24,737, marking an impressive gain of over 700 points. Similarly, the BSE Sensex opened at 80,803 and quickly ascended to 81,830, achieving an astounding rise of more than 2,200 points shortly after trading commenced.
Market Drivers Behind the Rally
Market analysts attribute this bullish sentiment to several intertwining factors:
- The recent ceasefire between India and Pakistan.
- Positive developments surrounding US-China and UK-EU trade agreements.
- Progress on the India-UK Free Trade Agreement.
- Strong data from AMFI, which has bolstered retail investor confidence.
- Increased speculation regarding foreign institutional investors (FIIs) ramping up their purchases.
These elements collectively contributed to a vibrant day on Dalal Street.
Previous Market Performance
In stark contrast, the Indian markets had witnessed a steep sell-off for two consecutive sessions prior to this rally, largely driven by escalating geopolitical tensions. Despite favorable global signals, the Nifty opened lower, settling at 24,008, down 265.80 points or 1.1%. This cautious sentiment prompted traders to adopt a risk-off approach amidst prevailing uncertainties.
Key Technical Insights
As per a report from Choice Broking, the Nifty index has recently broken below its consolidation zone but has managed to stay above the 21-day exponential moving average (EMA), which currently serves as immediate support. The report outlines:
- The Nifty is potentially in its 3rd wave, targeting 23,850 (1.618 level).
- If it fails to maintain this level, the next support could be around 23,490 (2.618 level).
- A decisive close below 24,000 could trigger increased downward momentum.
Meanwhile, the Bank Nifty closed at 53,595.25, reflecting a 2.76% decline compared to the previous week. The weekly chart indicates a struggle to maintain levels above 54,000, suggesting a potential pause in the uptrend.
Outlook for Bank Nifty
The brokerage firm advises that the Bank Nifty has formed a strong bearish candle without upper or lower wicks, accompanied by consistent trading volumes. This suggests a rejection at higher levels and implies a sideways to bearish consolidation phase ahead. The recommended strategy is to “sell on the rise” as long as the index remains below 55,000, with lower targets projected at 53,000 and 52,000.
In conclusion, while the stock market experienced a significant boost from geopolitical developments, ongoing caution remains prevalent among traders. Keeping an eye on key technical levels will be crucial for navigating the upcoming trading sessions.
