Sensex and Nifty climbed over 2 per cent each on Friday, taking many investors by surprise. The rise, which analysts said was led by short coverings, was seen ahead of election results for Maharashtra and Jharkhand due on Saturday. Technical analysts said the short-term term has reversed and some further recovery is on the cards.
Prashanth Tapse, Senior VP (Research) at Mehta Equities said the exit polls hinting at BJP winning in both the states seemed to have boosted investor sentiment in a big way and helped investors shrug off the Adani worries.
"Also, many of the stocks are now looking relatively attractive, especially after the relentless selloff over past few weeks due to dismal Q2 earnings and unabated FII fund outflows, and hence the reversal of trend,” he said.
The BSE Sensex soared 1,961.32 points, or 2.54 per cent, to 79,117.11. Nifty was up 557.35 points, or 2.39 per cent, to 23,907.25.
On the technical side, Jatin Gedia, Technical Research Analyst at Sharekhan said Nifty witnessed a short-covering induced rally. The index surpassed the high of the last five trading sessions. "On the daily chart, Nifty surpassed the previous swing high of 23,780 and, thereby, reversing its short-term trend. We expect the Nifty to retrace towards 24,400 with potential to extend towards 24,730. Levels of 23,630–23,560 shall act as a crucial support zone and only a dip below these levels shall make the structure weak," Gedia said.
Rupak De, Senior Technical Analyst at LKP Securities said Nifty is back above the 200-DMA, indicating an improving trend. Additionally, the Nifty has broken out of a few days of congestion on the daily timeframe. The RSI has entered a bullish crossover near the oversold zone, suggesting positive momentum.
"The sentiment appears favorable for a meaningful rally in the short term, as long as the index stays above 23,600. Immediate resistance is seen at 23,960–24,000. A decisive move above 24,000 could trigger a rally toward 24,500. On the downside, supports are placed at 23,750 and 23,550," De said.
Ajit Mishra – SVP, Research at Religare Broking said state election results could influence the market’s direction on Monday, especially in the early hours. He said Nifty is nearing its immediate resistance at the 20 DEMA around 24,050.
"A decisive breakout could push it toward 24,350, but failure may trigger profit booking. Traders should maintain a stock-specific approach, focusing on IT and banking, which exhibit stronger momentum, while being selective in other sectors,," he said.
Krishna Appala, Senior Research Analyst at Capitalmind Research said the recent corrections has created opportunities to accumulate quality stocks with strong fundamentals and resilience to macroeconomic pressures.
"Despite global challenges, India's long-term growth story remains compelling. Investors should focus on sectors aligned with structural themes such as urbanisation, infrastructure, and consumption growth. Strategic portfolio adjustments, disciplined investing, and a long-term perspective are critical to navigating the current environment," he said.