Investors return to Dalal Street as stocks become attractive after correction. (Img: Pinterest)
Mumbai: The Indian stock market opened on a cautious but positive note on Friday as benchmark indices attempted to recover losses after witnessing one of their sharpest declines in recent weeks.
The BSE Sensex gained momentum during early trade, rising more than 170 points to trade around 73,753 levels after recovering nearly 300 points from the day's lowest level. The NSE Nifty 50 also moved above the crucial 23,100 mark with gains of nearly 50 points.
The rebound came after a brutal selling session on Thursday, when investor sentiment weakened sharply due to rising crude oil prices, concerns over global inflation, elevated bond yields and heavy foreign fund outflows. The Sensex had fallen more than 1,200 points, while the Nifty dropped nearly 384 points in the previous session.
Friday's recovery was mainly driven by value buying, with investors looking at quality stocks that had become attractive after the recent market correction.
The biggest trigger behind Friday's recovery was buying interest in fundamentally strong stocks after the sharp decline. Market participants stepped in to accumulate shares available at lower valuations, helping major indices regain some ground.
However, the market recovery remained cautious as several global factors continued to create uncertainty.
Crude oil prices remained one of the biggest concerns for investors. Although international oil prices declined slightly during Friday's session, Brent crude continued to trade above $105 per barrel.
For India, which depends heavily on crude oil imports, rising energy prices can increase the import bill, impact inflation levels and put pressure on corporate earnings.
Investors are also closely monitoring geopolitical developments in the Middle East, including tensions involving Iran, the US and concerns over disruptions in global energy supply routes.
Another major challenge for equity markets has been the rise in global bond yields, especially US Treasury yields. Higher bond yields often reduce investor appetite for risky assets such as equities as fixed-income investments become more attractive.
The increase in US yields has also created pressure on emerging markets, including India. The US 10-year Treasury yield touched elevated levels, increasing concerns about global liquidity conditions and future interest rate decisions.
Sector-wise movement remained mixed during Friday's trading session. Information Technology stocks continued to face pressure due to concerns over rising US bond yields, a stronger dollar and global demand uncertainty. Shares of major IT companies including Infosys, TCS, Wipro and Tech Mahindra remained under pressure.
Meanwhile, financial and banking-related stocks witnessed buying interest after heavy losses in the previous session. Among the major Nifty gainers were Bajaj Finserv, Shriram Finance, Power Grid, Bajaj Auto and Axis Bank. The financial services sector remained in focus after concerns related to possible insurance commission changes triggered heavy selling pressure earlier.
Foreign Institutional Investors continued to influence market sentiment with aggressive selling activity. Foreign investors sold Indian equities worth around Rs 5,027 crore in the previous session, marking one of the biggest single-day outflows during the month.
Domestic Institutional Investors provided some support by buying shares worth around Rs 4,301 crore, helping limit the impact of foreign selling. Market experts believe domestic buying has prevented a deeper decline, but overseas fund movement and global risk factors will remain important drivers for Indian markets.
From a technical perspective, traders are closely watching the 23,000 level on Nifty. Analysts believe the index needs to sustain above the 23,200-23,300 zone to build stronger recovery momentum. A breakout above 23,300 could open the possibility of movement towards 23,400-23,500 levels.
On the downside, 23,000 remains a crucial support area. A decisive fall below this level may increase selling pressure and push Nifty towards 22,900-22,800 levels. The India VIX, which measures market volatility, declined nearly 3 percent to around 12.32 levels, indicating some improvement in short-term investor confidence.
Global market cues remained mixed as Asian markets showed different trends. Japan's Nikkei traded higher, while Hong Kong markets remained under pressure. South Korean markets remained closed due to a holiday.
Wall Street also ended almost flat in the previous session, with the S&P 500 witnessing a marginal decline, Nasdaq showing slight gains and the Dow Jones closing lower. GIFT Nifty indicated a muted start for Indian markets, reflecting continued caution among investors.
Market participants believe the next direction of Dalal Street will depend on crude oil movement, global interest rate expectations, foreign investor flows and geopolitical developments.
Long-term investors are closely tracking fundamentally strong companies as recent market corrections have brought several large-cap stocks into attractive valuation zones. However, analysts believe a sustained recovery will require stronger global signals and improvement in investor confidence.
