Sensex, Nifty edge higher on Defence rally

Equity benchmarks extended their winning streak for the third consecutive session on Thursday, led by strong performance in defence and PSU stocks ahead of the interim Budget.

The 30-share BSE Sensex rose 226.85 points or 0.30 per cent to close at 76,759.81, while the broader NSE Nifty gained 86.40 points or 0.37 per cent to end at 23,249.50 in a volatile session, marked by the monthly derivatives expiry.

“The Indian markets concluded on a positive note despite fluctuating between gains and losses. The fall in oil prices due to a rise in US inventories and an ease in US 10-year yield after the US Fed’s hawkish view may decelerate FIIs outflow,” said Vinod Nair, Head of Research, Geojit Financial Services.

Gainers, laggards

Bharat Electronics Ltd (BEL) emerged as the top gainer on the NSE, surging 4.87 per cent, followed by Power Grid (2.80 per cent), Hero MotoCorp (2.76 per cent), Bharti Airtel (2.63 per cent) and Cipla (2.53 per cent). On the flip side, Tata Motors plunged 6.98 per cent, followed by ITC Hotels (-5 per cent), Adani Enterprises (-3.05 per cent), Shriram Finance (-2.29 per cent) and Bajaj Finserv (-2.26 per cent).

The market breadth remained positive with 2,138 stocks advancing and 1,812 declining on the BSE. Sixty-one stocks hit their 52-week highs, while 100 touched their 52-week lows. Ten stocks hit the upper circuit, while four touched the lower circuit.

Sectoral performance was mixed, with the defense index rallying over 2 per cent, while media and IT indices declined more than 1 per cent. The Nifty Bank index gained 0.30 per cent to close at 49,311.95, while Nifty Financial Services rose 0.39 per cent to 23,133.70.

“The Federal Reserve’s statement on maintaining steady rates while closely monitoring inflation data adds to the uncertainty,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities, adding that “technically, after a promising pullback rally, the market is holding an uptrend continuation formation, which is largely positive.”

Rupee, gold

The Indian rupee weakened by 0.08 to close at 86.63 against the US dollar. “With more focus on India’s upcoming Budget announcement, which is expected to set the tone for foreign investment and economic growth, any major policy changes could impact rupee sentiment in the near term,” said Jateen Trivedi, VP Research Analyst at LKP Securities.

Gold prices in the domestic market gained ₹500 to reach ₹81,400 per 10 gram on MCX, showing a significant divergence from international prices. “A significant divergence was observed between Comex and MCX, with domestic gold rallying 2.5 per cent in the past week, while Comex gained only 0.50 per cent,” Trivedi added.

Hrishikesh Yedve, AVP – Technical and Derivatives Research, Asit C. Mehta Investment Intermediates, said that “Nifty formed a green candle on the daily chart, indicating strength, with immediate resistance near 23,340, where the 21-Days Simple Moving Average (21-DSMA) is placed, and strong support at 23,000.”

Near-term outlook

Market analysts remain cautious about the near-term outlook. “With the Budget countdown underway, we anticipate continued market fluctuations. Nifty is encountering resistance around its 20-day EMA at 23,300, and a decisive close above this level is crucial for further recovery,” said Ajit Mishra, SVP, Research, Religare Broking.

Hardik Matalia, Derivative analyst at Choice Broking, pointed out, “On the sectoral front, the Realty, Energy, Pharma and FMCG sectors posted gains, rising between 0.72 per cent and 1.78 per cent. In contrast, the Media, IT, and Auto sectors experienced notable declines.”

The volatility index, India VIX, dropped 6.70 per cent to 17.39, indicating reduced market uncertainty ahead of the interim Budget. Market participants are particularly focused on potential policy announcements that could impact infrastructure spending and tax relief measures.

“The upcoming Budget may be seen as an inflection point, which is likely to reverse the current bearish trend if the policies restore growth and consumption,” concluded Satish Chandra Aluri from Lemonn Markets Desk.