Sensex and Nifty rebounded on Friday, snapping their longest weekly losing streak in 25 years. The Nifty climbed 288.65 points to close at 22,520.45. IT stocks led the gains after TCS reported strong earnings. Experts said the market formed a Doji candlestick, showing indecision between buyers and sellers after recent losses.
The equity benchmark indices Sensex and Nifty rebounded on Friday, snapping their longest weekly losing streak in 25 years, led by information technology stocks after Tata Consultancy Services (TCS) reported quarterly earnings that highlighted growing revenue contributions from artificial intelligence and strong international business growth.
The Sensex jumped 879.09 points, or 1.23 percent to settle at 72,472.33. During the day, it surged 1,075.96 points, or 1.5 percent to 72,669.20.
The Nifty climbed 288.65 points, or 1.3 percent to close at 22,520.45.
For the week, the Nifty 50 and Sensex gained 0.4 percent and 0.8 percent, respectively. Both indices had declined over the preceding eight weeks, with the Nifty falling 8.7 percent and the Sensex losing 8.4 percent.
Choice Institutional Equities said the Nifty's weekly chart had formed a Doji candlestick, indicating indecision between buyers and sellers following the prolonged correction.
The index continued to trade below the 50-week exponential moving average (EMA), while the 200-week EMA near 22,382 remained an important technical level. The weekly close was marginally above the latter.
The brokerage said the weekly relative strength index (RSI) continued to show weakness, with the index trading below the neutral level of 50. A sustained improvement in the RSI would be needed to confirm a more durable recovery.
Hariselvan Radhakrishnan, founder and chief executive officer of HST Wealth, a SEBI-registered research analyst firm, said the Nifty had formed a Doji on the weekly chart, reflecting indecision between buyers seeking a recovery and sellers defending higher levels.
A positive divergence in the daily RSI suggested that downward momentum was weakening, but price confirmation was still needed, he said.
The Nifty needs to sustain above 22,600 to extend the rebound towards 22,800. A failure to hold 22,400 could expose the index to a decline towards 22,000, Radhakrishnan said.
Dharmesh Kant, head of equity research at Cholamandalam Securities, said the market was likely to find technical support following the recent decline.
The Nifty 50 has the potential to rise about 5 percent if earnings growth meets expectations and crude oil prices ease below USD 100 per barrel, he said.
Financial stocks gained 1.7 percent during the week, supported by strong quarterly business updates and the absence of liquidity withdrawal measures by the Reserve Bank of India following its 25-basis-point rate hike.
Information technology stocks rose 1 percent over the week.