Nifty, Sensex Rebound on Auto, Pharma Gains Amid Cautious Outlook

On November 29, benchmark indices Nifty and Sensex extended their gains, supported by strong performances in auto, pharma, energy, and infrastructure stocks. This rebound came a day after the markets experienced their steepest single-day decline in nearly two months. 

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Analysts attribute the recovery to adjustments reflecting expectations of a slower pace of interest rate cuts due to robust U.S. economic growth and lingering inflation concerns. The Core PCE Price Index, the Federal Reserve’s preferred inflation measure, recorded a 2.8% year-on-year increase in October, which has tempered hopes of near-term policy easing.

By mid-morning, the Sensex had risen 748.25 points, or 0.95%, to 79,791.99, while the Nifty climbed 212.00 points, or 0.89%, to 24,126.20. Market breadth was positive, with 1,851 stocks advancing, 1,359 declining, and 134 remaining unchanged. 

Despite the rebound, experts maintain a cautious outlook. Ruchit Jain, Vice President of Technical Research at Motilal Oswal, noted that while foreign institutional buying had recently supported the market, the sell-off seen the previous day had reignited bearish sentiment. He added that the lack of positive triggers could limit aggressive buying in the final weeks of the year.

Foreign Institutional Investors (FIIs) offloaded ₹11,756 crore in the cash market on November 28, bringing total outflows for the month to nearly ₹42,000 crore. This came after a brief two-day buying spree in which FIIs made net purchases of ₹1,162 crore. 

Among individual stocks, Adani Green Energy surged 10%, hitting its upper circuit for the third consecutive session, as it, along with Adani Energy Solutions and Adani Total Gas, was included in the NSE’s futures and options segment. Adani Energy Solutions and Adani Total Gas also posted strong gains of 9% and 6%, respectively.

Reliance Industries gained nearly 2% after its U.S.-based subsidiary acquired a 21% stake in helium gas exploration company Wavetech Helium, Inc., prompting Morgan Stanley to issue an "overweight" rating. Meanwhile, Zomato saw a decline after raising ₹8,500 crore through a Qualified Institutional Placement (QIP) issue, pricing its shares at a 5% discount to the floor price. CreditAccess Grameen, however, plummeted 11% after Goldman Sachs downgraded the stock to "sell," citing concerns about over-leveraging in the sector and declining asset quality.

The broader market saw modest gains, with mid- and small-cap indices rising 0.2% each, continuing their outperformance over headline indices. Both have delivered 21% gains year-to-date, compared to the Nifty's 11%. Nifty Pharma, Energy, Infra, IT, and Auto indices rose by 0.7% to 1.4%, bolstered by stocks like Sun Pharma, Dr. Reddy’s, and Divis Labs. Nifty Bank edged higher by 0.3%, with HDFC Bank, ICICI Bank, and SBI contributing to the gains. Nifty Realty erased early losses to trade flat but remains a standout performer this year, with a 30% gain year-to-date.

Traders are closely watching upcoming economic data, including India’s Q2 GDP, China’s manufacturing PMI, and Eurozone CPI, which are set to be released tomorrow. According to Siddhartha Khemka, Head of Research and Wealth Management, optimism could return if geopolitical concerns ease, though markets are expected to consolidate within a broader range for now. The Nifty index remains under cautious pressure, facing selling interest at every uptick. 

A critical support zone exists between 23,800 and 23,900, with a breakout above 24,100 potentially triggering a short-covering rally toward 24,500. On the downside, a breach below 23,800 could lead to intensified selling pressure, dragging the index toward 23,500.

Key gainers in the session included Cipla, Sun Pharma, M&M, Bharti Airtel, and Adani Ports, while Power Grid, Shriram Finance, SBI Life Insurance, Coal India, and Hero MotoCorp were among the top losers. Markets remain in a phase of cautious consolidation, with mixed signals from both domestic and global factors shaping sentiment.