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A day after massive declines in Sensex and Nifty that spread panic and fear among traders, the stock markets made a strong recovery on Tuesday. But experts advise caution, as the markets were still not out of the woods.
On Tuesday, the BSE Sensex rose by 0.89 per cent and Nifty by 0.94 per cent. The BSE Sensex gained 497 points to close at 56,319.
The Nifty index rose 156 points to close at 16770. Nifty is up by 337 points from Monday’s low levels of 16,433. The Sensex had declined by 1,900 points on Monday.
US to drive markets
Tuesday’s rally came on the back of a positive opening of the US stock futures. Analysts now say that a further sharp decline in markets is anticipated if the Nifty index breaks Monday’s low levels. Also, they are firmly eyeing the moves in the US markets for further cues. Futures indices of Dow Jones, S&P and Nasdaq in the US trading higher by over 1 per cent.
Relentless selling by foreign portfolio investors (FPIs) during December has seen the Nifty and Sensex crash by nearly 10 per cent. The US stock markets have been falling on the back of worries over Omicron, Federal Reserve decision to hike interest rates and uncertainty over the government’s plan to get its spending bill approved in the house of senators.
“We had a smart recovery towards 16,900 (for Nifty) after posting a low yesterday around 16,400. With reference to our previous commentary, we had mentioned how the gap area around 16,840-16,966 should be treated as an important hurdle. Today, when it appeared as if we were going to challenge the 17,000-mark, this gap area proved its significance as we witnessed a sudden decline after nearing the higher end of the gap. We reiterate that if the market has to confirm its near term bottom, Nifty needs to surpass 17,000 – 17,200 with some authority,” Sameet Chavan, Chief Technical Analyst at stock broking house Angel One, said.
Said Nagaraj Shetti, Technical Analyst, HDFC Securities: “The market has witnessed sharp downward reversals from the higher resistances in the recent past. We expect the upper area of 17000-17100 levels to be a strong resistance in the short term.”
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