Indian stock markets staged a sharp comeback for the second consecutive session, with BSE Sensex advancing 789.74 points, or 1.06%, to close at 75,398.72 and Nifty climbing 277 points, or 1.18%, to 23,689.60. According to The Economic Times, the recovery was driven by reports of a potential tax cut on foreign investments in Indian bonds, with the rupee's rebound from lows following the news easing nervous sentiment. The broader market sentiment stayed firmly positive, with the India VIX ending at 18.61, down by 4.2% from the last closing, indicating reduced volatility expectations. The afternoon rally was largely supported by broad-based buying across several key sectors, with sectors such as pharmaceutical, healthcare, banking, metals, chemicals, energy, Fast-Moving Consumer Goods and cement stocks gaining over 1% in the intraday trading session.
The Nifty and Sensex saw significant gains of over 1% on Thursday following reports of a potential tax cut on foreign investments in Indian bonds. As reported by The Economic Times, Sham Chandak, head of institutional equities at Elios Financial Services, noted that the market gained primarily because of news reports of the government looking to reduce tax on foreign bond investments and discussion of the opening of the Strait of Hormuz during Trump and Xi Jinping's bilateral talks. Gaurav Sharma, head of research at Globe Capital Market, emphasized that the proposal considering reducing taxes on foreign investment in domestic bonds is a welcome move that could improve foreign inflows into India and provide support to the falling rupee. The government is considering a significant reduction in the taxes paid by foreign investors on the Indian bonds to attract capital inflows, according to a Bloomberg report.
The Nifty IT index slipped more than 2.5%, making it the only major sectoral index trading in the red during intraday trade. As reported by The Financial Express, market participants remain concerned about the long-term impact of Artificial Intelligence on traditional technology outsourcing models. According to analysts, concerns around slower global technology spending, weak earnings visibility and Artificial Intelligence-led disruption continue to weigh on investor sentiment in the sector. The IT sector has been under pressure for the last six months, contrasting with the broader market recovery. Among the large cap names witnessing significant selling pressure were Infosys, Tech Mahindra and HCL Technologies, while other stocks like Tata Motors, Kaynes Technology and Zaggle Prepaid Ocean Services also faced substantial selling pressure.
Market breadth remained mixed despite the benchmark indices' gains, with 2,009 stocks witnessing advances, 2,196 seeing declines while 168 stocks remained unchanged out of 4,373 stocks that traded on BSE on Thursday. According to The Economic Times, foreign portfolio investors net bought shares worth ₹187 crore, while domestic institutions were buyers worth ₹684 crore. The Nifty Midcap 150 gained 1.2% while the Nifty Small-cap 250 ended flat, with small and micro-cap indices remaining flattish. Most active stocks in terms of turnover included Axis Bank (₹1,009 crore), MTAR Technologies (₹363 crore), HDFC Bank (₹349 crore), Bharti Airtel (₹299 crore), Adani Enterprises (₹278 crore), Reliance Industries (₹275 crore) and Larsen & Toubro (₹307 crore). Stocks showing strong buying interest included Zydus Lifesciences, NLC India, Multi Commodity Exchange (MCX), Cipla, Adani Enterprises, Amines & Plasticizers and Black Rose Industries.
Technical analysts have identified key resistance levels that could determine future market direction. Gaurav Sharma from Globe Capital Market noted that the index has support at 23,200-23,400, with a strong hurdle near 23,800, while a breakout above 23,800 could take the Nifty towards 24,200-24,400. He emphasized that as long as Nifty holds above 23,200, the broader trend remains positive and traders and investors may continue to maintain their bullish positions. Sham Chandak from Elios Financial Services highlighted that despite significant gains on the index, the breadth wasn't very encouraging, with small and micro-cap indices remaining flattish. The Nifty's Volatility Index or VIX, the street's fear gauge, fell 4.2% to 18.6 levels on Thursday, responding to the market rebound.
