Nifty, Sensex Rebound as Heavyweights Lead Market Recovery

Benchmark indices Nifty and Sensex closed the trading session on December 23 with firm gains, recovering from last week's steep sell-off. Heavyweights such as HDFC Bank, Reliance Industries, and ICICI Bank played a key role in the rebound after markets experienced their worst weekly performance in over two years, with indices plunging 5%.

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At the close, the Sensex advanced 498.58 points, or 0.64%, to end at 78,540.17, while the Nifty climbed 165.95 points, or 0.70%, to 23,753.45. The overall market breadth reflected mixed sentiment, with 1,565 stocks gaining, 2,348 declining, and 134 remaining unchanged.

Ajit Mishra, Senior Vice President at Religare Broking, described the session as a possible relief rally but warned that bearish sentiment continues to dominate. He highlighted that oversold stocks like HDFC Bank and Reliance occasionally attract buying interest, which can lift broader indices due to their significant market weights. However, sustaining these gains remains a challenge.

The sectoral landscape was uneven. Nifty Auto emerged as the sole sector in the red, weighed down by selling pressure. Nifty IT, which initially gained 1%, pared gains to end flat. Banking, metal, and realty stocks saw moderate gains ranging from 0.8% to 1.5%, with key contributors being HDFC Bank, ICICI Bank, SBI, and Axis Bank. In the metal sector, stocks such as JSW Steel, Tata Steel, Coal India, and Vedanta recorded gains of 1-2%. Meanwhile, the FMCG sector, which has fallen 16% in the past three months, posted a 1% gain, indicating some recovery.

Mid-cap stocks rose 0.33%, while small caps declined 0.2%, reflecting a mixed trend in broader market segments. Over the last three months, both indices have shown resilience with just a 5% decline each, compared to Nifty's sharper 9% fall. Mishra pointed out that large-cap stocks offer valuation comfort, with 28 out of 50 Nifty components trading below their long-term averages. This suggests limited downside, though mid and small-cap stocks will require earnings support to sustain their performance.

On the corporate front, International Gemological Institute shares rose 2%, easing from an intraday high of 9%. This followed its debut at a 22% premium earlier in the week. India Cements surged nearly 8% after the Competition Commission of India approved a ₹7,000-crore deal with UltraTech Cement, allowing the latter to acquire a majority stake in the company. HCC shares, however, fell over 6% as the company announced the divestment of its stake in Steiner AG to Uniresolv SA as part of a strategy to focus on core EPC operations.

Looking ahead, Anand James, Chief Investment Strategist at Geojit Financial Services, expressed cautious optimism. He suggested that if Nifty manages to sustain a pullback above its 200-day SMA, it could move towards 24,165. However, a failure to hold above 23,700 may indicate weakness, though another panic-driven drop seems unlikely.

Top-performing Nifty stocks included JSW Steel, Trent, ITC, Hindalco, and IndusInd Bank, while laggards were Hero MotoCorp, Maruti Suzuki, Nestle India, Bajaj Finserv, and HCL Tech. Despite lingering challenges, the rebound in heavyweight stocks provided much-needed support to the market, offering a respite after a tumultuous week.