Nifty and Sensex Recovers, Concluding a 5-day Standstill As Metal and Pharma Stocks Surge

After five consecutive trading sessions of decline, the bulls regained control as the benchmark indices traded positively, buoyed by a significant rally in the metal and pharma sectors.

Around 9:20 am IST, the Sensex saw a rise of 0.17% to 80,177, while the Nifty increased by 0.24% to 24,464. There were 1,939 advancing shares, 525 declining shares, and 127 shares remained unchanged.

"Following the budget, I believe the markets have entered a corrective phase. This correction is more time-based rather than price-based, keeping the index within a range. During this period, we observe a lot of stock-specific action on both sides. For instance, while the banking sector is underperforming, other sectors like oil and gas performed well yesterday. I expect this kind of activity to continue today," said Ruchit Jain, a research analyst at 5paisa, in a conversation with Moneycontrol.

Tech Mahindra stock gained attention following its Q1FY25 earnings report. The company's net profit surged to Rs 851.5 crore, a 23% year-on-year increase and a 29% sequential increase, owing to a low base. Consolidated revenue for the April-June quarter climbed 10% from the previous quarter to Rs 13,005.5 crore.

The midcap and smallcap indices outperformed the main indices, rising by 0.7% and 0.6% respectively. Jain noted that this outperformance might decline due to stretched valuations. "While a sharp correction is unlikely, the preference for new investments will likely shift to the large-cap space."

After a decline of over one% yesterday, the Metal index emerged as the top performer, driven by gains in Hindalco and Tata Steel. The Pharma and Healthcare indices followed, each rising nearly one%. Jain also mentioned that some large-cap pharma stocks have undergone a significant consolidation phase over the past six months. Now, the market will be looking for sectors or stocks with a more favorable risk-reward ratio.

Out of the 13 indices, the Bank Nifty was the only underperformer, dragged down by ICICI Bank, Federal Bank, and Axis Bank. "In the near term, banks are likely to underperform due to subdued earnings from major lenders like Axis Bank," he added.

Hindalco, Bharti Airtel, LTIMindtree, Coal India, and Shriram Finance were the top gainers on the Nifty. On the other hand, Tech Mahindra, IndusInd Bank, Tata Consumer Products, Maruti Suzuki, and Axis Bank were among the losers.

"Nifty can find support at 24,300 followed by 24,350 and 24,200. On the higher side, 24,500 can be an immediate resistance, followed by 24,550 and 24,600," said Deven Mehata, a research analyst at Choice Broking. "The Bank Nifty charts suggest it may get support at 50,600, followed by 50,500 and 50,300. If the index advances further, 51,000 would be the initial key resistance, followed by 51,200 and 51,500," he added.