Sensex rises 450 pts from day's low, Nifty above 22,750: Value buying among key factors behind market gain

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Benchmark index Sensex rose 450 points from day's low while Nifty 50 was trading above the 22,750-mark on September 30 due to various reasons, including value buying.

At 10:22 am, the Sensex was up 354.66 points or 0.49% at 72,883.73, and the Nifty was up 49.50 points or 0.22% at 22,765.70. About 2,353 shares advanced, 1,152 shares declined, and 165 shares were unchanged.

Pharma and healthcare stocks remained under pressure, with the Nifty Healthcare and Nifty Pharma down 1.7% and 0.9%, respectively, to be the worst hit sectoral indices.

On Wednesday, the semi-annual rejig of Nifty 50 constituents took effect. BSE has replaced Wipro in the blue-chip index. Shares of BSE traded nearly 3% lower to be among the worst hit in the 50-stock index. Wipro, on the other hand, was up 2.5%. Among other stocks, Hitachi Energy India, Polycab India, Vedanta Aluminium Metal, and Vodafone Idea entered the Nifty 100 index. These stocks were down 0.3-2.8%.

Key factors behind market gain

1) Value buying

Value buying emerged at lower levels as markets were seen in oversold territory.

2) India VIX eases

India VIX, the volatility index, was trading nearly 2% lower at 13.17, which indicates lesser nervousness among market participants.

3) Technical reason

Nifty has to trade below 22,650 for further bearishness to emerge in the market, said analysts.

"The short-term trend remains weak, although a quick pullback rally cannot be ruled out. For day traders, 22,600/72,200 remains an important support zone. Sustaining above this level could trigger a pullback toward 22,850–23,000 on the Nifty and 73,000–73,500 on the Sensex. On the downside, a break below 22,600/72,200 could intensify selling pressure and drag the indices toward 22,500–22,300/72,000–71,400.

"Overall, the market remains vulnerable to volatility, with 22,500/72,000 acting as the immediate pivot for the next directional move," said Shrikant Chouhan, Head Equity Research, Kotak Securities.

"Immediate bias in the index remained down and a follow through weakness will signal extension of decline towards the key support area of 22,400 being the confluence of the trendline support joining the major lows of the past two years and the 200-week EMA. A move above 22,830 will signal a pullback towards the 23,000 levels. However, for a meaningful trend reversal index would require forming a sustained Higher High–Higher Low structure and reclaim the 23,000-23,100 level. A sustained move above 23,100 could signal a pause in the ongoing correction.

"The daily stochastic has approached oversold territory with a reading of 13, hence a pullback after the recent sharp decline cannot be ruled out," said Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.

"The market may attempt to stabilise after the recent decline, supported by buying emerging around key technical levels in both indices. However, persistent FII selling remains a concern and could restrict the recovery. With Nifty and Bank Nifty near important support zones, intraday price action is likely to remain range-bound with a cautious undertone," said Hitesh Tailor, Technical Research Analyst at Choice Broking Private Limited.

4) Buying in IT stocks

Nifty IT index rose 2.6% and looked to snap an eight-session losing streak, after dovish comments from a Federal Reserve official lowered bets of a US rate hike.

Higher US rates are likely to curb client spending for IT firms, which generate a significant share of their revenue from the US.