Sensex and Nifty staged a robust recovery on Monday, rebounding sharply after a steep 5% decline over the previous week. The rally was fueled by a slight moderation in US inflation data and positive global cues, with significant gains in both US and Asian markets. At noon, the BSE Sensex climbed approximately 0.9% to 78,690, while the NSE Nifty advanced by about 215 points, surpassing 23,800.Key factors driving this recovery include:
- Cooling US Inflation Data: The US Commerce Department reported a modest 0.1% increase in November CPI inflation, indicating a cooling trend that may influence Federal Reserve interest rate decisions.
- Technical Support for Nifty: Analysts noted that the Nifty index is poised for a pullback above its 200-day Simple Moving Average, currently at 23,837. A sustained rally could see it test levels around 24,165.
- Positive Global Cues: Major Asian markets experienced gains, and US indices had recorded over 1% increases on Friday, contributing to bullish sentiment in Indian markets.
- Metals Sector Surge: Shares of steelmakers rose following an investigation into a safeguard duty request on imports, boosting the Nifty Metal index.
- US Government Shutdown Averted: The passage of spending legislation in the US Congress alleviated concerns of a government shutdown, further lifting market sentiment.
Despite this rebound, analysts caution that sustained recovery hinges on signs of economic growth and monitoring of Foreign Institutional Investor (FII) flows.
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