Reliance Industries' solid support kept key indices from seeing sharp drops on January 8. Rising crude prices caused oil and gas stocks to soar, but the IT sector's backing and ITC share returns helped the indices recover and close the session flat.
Indian Stock Market: During Wednesday's trading session on January 8, the leading indices managed to avoid yet another notable decline thanks to strong support from heavyweights, especially Reliance Industries.
Rising crude oil prices caused the entire pack of oil and gas equities to shine during today's trading session, raising hopes that these prices will increase the margins of these businesses.In spite of adverse global signals, including a sell-off in US tech stocks overnight and worries about a possible postponement of the US Fed's 2025 rate decrease, Indian markets were able to recover from the day's lows.
The market as a whole, however, was unable to maintain its winning surge during today's session due to the intense selling pressure, which caused them to end the session with significant losses.
With a slight decline of 0.08%, the Nifty 50 ended the session at 23,688.The index recovered 192 points, or 0.81%, from the day's low. Similarly, the Sensex ended the session with a slight decline of 0.06% after rising 666 points, or 0.86%, from the day's low.
There was significant selling pressure on mid- and small-cap equities throughout the trading day. The Nifty Smallcap 100 index saw a 1.65% deep cut, closing at 18,365, while the Nifty Midcap 100 index saw a 1.05% decline, closing at 56,270.
"Slowing economic growth projections and caution ahead of Q3 numbers added volatility in the market," Vinod Nair, Head of Research at Geojit Financial Services, stated in response to today's market performance.The accumulation of battered blue-chip stocks and the hope of government reforms in the next budget to boost the weak economy, however, caused the market to rebound from the day's low.
"The near-term sentiment is likely to be subdued due to the rise in US bond yield and fear of fewer rate cuts by the Fed," he stated.
Reliance shares record their largest one-day rise in more than six weeks.
As brokerages became optimistic on the company after it had corrected 22.40% during the previous six months, shares of Reliance Industries ended the day up 2% at 1,265 apiece, making it the largest intraday gainer since mid-November.
While keeping its 'buy' recommendation, international firm Jefferies increased its target price for the stock from ₹1295 to ₹1950 per share. According to the report, the stock is now valued at its lowest point since the COVID-19 pandemic. The firm predicted slower earnings growth in FY25 and emphasized medium-term development hurdles, especially in the retail area.
Bernstein, meanwhile, set a target price of ₹1,520 and kept its 'outperform' rating on the company. The firm anticipates a recovery cycle in 2025, with better refining margins and earnings growth spearheaded by the retail and telecom sectors.
Nifty 50: Important benchmarks and patterns
According to Vatsal Bhuva, LKP Securities' technical analyst, "The Nifty index is currently trading between 23,500 and 24200.It strengthened the 23,500-support level on Wednesday by forming a hammer candlestick on the daily chart and finishing close to its 200-day EMA.
"The index must either close below 23,500, which may increase selling pressure, or hold above 24,000 to open the door for a possible rally toward 24,500 in order to make a clear move. To determine the index's next trend, it is imperative to keep an eye on these critical levels," Vatsal continued.
"Technically, following an intraday correction in the early morning hours, the market found support near 23,500/77,500 and recovered sharply, recovering over 175/600 points from its lowest level of the day," stated Shrikant Chouhan, Head of Equity Research at Kotak Securities.We think the pullback pattern is likely to last as long as the market is trading over 23,500/77,500. On the plus side, it might recover to about 23,800/78,500.
The index might rise to the 200-day Simple Moving Average (SMA) around 23,925/78,900 if more increases materialize. However, mood may shift below 23500/77500; traders may decide to sell their long holdings below that level, according to Shrikant.
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