Sensex surges over 1,000 points, Nifty reclaims 23,400 mark
What's the story
After trading in red during morning hours, the Indian stock market witnessed a major comback with benchmark indices Sensex and Nifty rising over 1.2%. At the time of writing, the Sensex was up 1,050 points at 75,613 while the Nifty was up 287 points at 23,437. The rally was driven by value buying and a decline in India VIX (volatility index), which improved market sentiment amid geopolitical tensions arising from the US-Iran war.
Market overview
India VIX eases to below 22-mark
The market witnessed a broad-based rally, with many sectoral indices on the NSE trading in the green. The metal, auto, and FMCG sectors led the recovery after a four-day losing streak. The India VIX eased 3% to trade below 22 today, indicating expectations of lower selling pressure from investors. However, analysts have warned that despite this easing, the VIX staying above 18 indicates near-term volatility in the market.
Geopolitical influence
Geopolitical developments boost market sentiment
The market's recovery was also aided by geopolitical developments. The Wall Street Journal reported that the US government is preparing to announce a coalition of countries to escort ships through the Strait of Hormuz, a key oil supply route. Further easing concerns over supply disruptions, two India-flagged LPG carriers safely crossed this strait last week en route to India.
Market forecast
Market experts warn of potential pullback
Shrikant Chouhan from Kotak Securities said that the market has formed lower highs and lower lows on daily charts, indicating a weak formation likely to continue as long as it trades below 23,500/75,300. Axis Securities also noted a structural bearish shift in Nifty monthly options chain with Call resistance solidifying at 24,000-24,500 while Put concentration migrated downward from 24,000 to the 22,000-23,000 zone signaling significant long unwinding and a widening trading range.