Stock Market Outlook: Sensex jumps 3,000 points in two days, Nifty 50 regains 23K peak. What lies ahead?

The Indian stock market benchmark indices, Sensex and Nifty 50, witnessed a stellar rally on Tuesday, opening with a big gap-up, and extending the uptrend following positive cues from global markets. The Sensex jumped more than 1,500 points, or over 2%, to trade above 76,700 level, while the Nifty 50 surged 480 points to surpass 23,300 level.

While the market is witnessing the short-covering rally, analysts believe that the uncertainties over the US President Donald Trump policies still persist which makes it critical for investors to navigate the market through sectors and stock-specific approaches.

“S&P 500 is up by 9 % from the April lows, on the tariff pause. Since Nifty 50 is up only 3% from the April lows we have some catching up to do. This catching up and some short-covering will keep the market strong for the day. But investors have to understand that the uncertainty triggered by Trump is very much alive and, perhaps, more uncertainty is likely to come with sectoral tariffs, which Trump has declared are going to come,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

During this period of heightened uncertainty and potential volatility, he suggests investors to focus on strong domestic consumption sectors like financials, telecom, aviation, hotels, hospitals and selectively on autos.

Technical Outlook

On the technical side, the benchmark Nifty 50 has crossed the important hurdle near the 50-EMA (Exponential Moving Average) level at 23,000 zone. As the index decisively breached this level, it is further establishing conviction for upward move.

“Nifty 50 swept its swing low at 21,744 and bounced back sharply, indicating a classic liquidity sweep followed by strong buying interest. This move clears out weak hands and sets the stage for a rally toward the swing high at 23,869.6. The presence of bullish gaps and rising volumes signals urgency and strength in the ongoing move,” said Anshul Jain, Head of Research at Lakshmishree Investment.

He advises traders and investors to continue to hold their long positions as the index appears poised to retest higher levels in the coming sessions.

According to Sameet Chavan, Head Research, Technical and Derivative - Angel One, the recent price movements highlight a remarkable resilience among domestic market participants relative to their global counterparts. Additionally, the pronounced gaps in the price charts reflect a notable degree of volatility affecting our markets, indicating moments of rapid price change.

Chavan said that the Nifty 50 index faces critical resistance at 23,200 - 23,300, aligning closely with the 89-DEMA, and a decisive breakout beyond this resistance level could catalyze a surge in bullish momentum, encouraging further buying interest among market participants and possibly leading to a more robust upward trend.

“As we navigate through this period, the ongoing earnings season, coupled with the global uncertainties, plays a pivotal role in shaping the market's direction. This dynamic environment keeps investors and market participants on their toes, especially during this week marked by a holiday-shortened trading schedule. The interplay of corporate financial reports and geopolitical developments will likely influence trading strategies and market sentiment, creating a mix of caution and opportunity,” Chavan said.

Bank Nifty Outlook

Bank Nifty index also surged more than 2% on Tuesday, and breached the 52,000 level. The banking index surged as much as 2.54% to hit an opening high of 52,299 level.

Analysts believe a decisive breach above the 52,000 zone shall confirm a breakout anticipating for fresh upward move in the coming days.

“The Bank Nifty seems to be in the overbought zone and we are witnessing only gap-up openings without major volumes. If the index sustains above 52,200, we may see a rally towards 52,800 to 53,000 levels. The key resistance level for Bank Nifty lies around 52,500 - 53,000 where we may see profit booking. Support is placed around 51,500 - 51,000 and buying on dips around these levels is suggested,” said Ganesh Dongre, Senior Manager — Technical Research at Anand Rathi.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.