Equity markets recovered partially from the sharp sell-off witnessed on Tuesday. Nifty rallied 194 points or 1.4% to close at 14,505 while Sensex spiked 661 points or 1.4% to end at 48,544. Broader markets too rallied with Nifty MidCap 100/Nifty Smallcap 100 up 1.7% and 1.3% respectively.
Majority of the sectors ended in green with Auto, Banks, Financials and Metals gaining in the range of 3% to 4.5%. IT was the major laggard - down -3.3% followed by Pharma (-1.2%). The India Volatility Index fell 11% to end at 20.46.
Global cues were positive post strong export data of China and ahead of US inflation data.
On the domestic side, Nifty opened flat to positive and remained highly volatile in the first half, but witnessed sharp pullback in the second half. Investors cheered the government's proposal to fast-track approvals for covid-vaccines made by foreign producers and approved by global health agencies. Further the prediction of normal to above normal rainfall and marginally lower covid cases also provided support to the market. This is the third year in succession that India may see "above normal" rains during the season.
M&M, Bajaj Finserv, Tata Motors, Bajaj Finance and Maruti Suzuki were the top gainers on the Nifty, while TCS, Dr Reddys Laboratories, Tech Mahindra, Wipro and HCL Technologies fell the most.
Commenting on the market outlook, Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services opined, "Technically, Nifty formed a Bullish candle and an Inside Bar on daily scale with longer lower shadow indicating declines were being bought. Now, it has to decisively hold above 14,500 zones for an up move towards 14,650 and 14,800 zones while on the downside, support exists at 14,250 and 14,100 zones."
"Going ahead, Indian markets are likely to be highly volatile and would be an interplay of resurgence in COVID-19 cases and the pace of vaccination. However, there could be some positive impact from the earnings season which starts off from this week," he added.
Khemka expects Q4 to be another strong quarter and investors would watch out for management commentary given the resurgence of Covid fear which may pose a risk to the growth estimates. "Long term investors should take advantage of such volatility and accumulate quality stocks while traders should be very cautious and follow stock specific action."
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