Market Rebounds Sharply: Sensex Recovers 700 Points, Nifty Surpasses 23,500 Barrier

Indian Stock Market Partially Recovers on May 18

The Indian benchmark indices, Sensex and Nifty, staged a partial recovery on May 18 after a decline of up to 1.3% on an intraday basis. At 11:35 am, the Sensex was down 327.30 points or 0.44% at 74,910.69, and the Nifty was down 112.90 points or 0.48% at 23,530.60. The market saw 824 shares advancing, 2,917 shares declining, and 158 shares remaining unchanged.

Tata Steel led the decline, falling 5% after the steelmaker posted a smaller-than-expected fourth-quarter profit. Power Grid slid 4.1% despite reporting a nearly 10% rise in March-quarter profit. Motilal Oswal attributed the profit growth to a 52.8 billion-rupee deferred tax asset, but noted that revenue and operating profit missed its estimates.

In contrast, Gland Pharma bucked the trend, jumping 13.4% after the drugmaker reported a 97% rise in its March-quarter net profit. This unexpected gain helped the market stage a partial recovery.

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Market Recovery Factors

Several factors contributed to the partial market recovery on May 18. The Sensex rose 450 points from its day's low as value buying emerged at lower levels. The benchmark indices cumulatively fell 3.5% and 4%, respectively, in the last six sessions.

The India VIX, a volatility gauge, also eased from higher levels on May 18, dropping from 20.05 to 19.51.

Technical Analysis

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Analysts believe that the Nifty could take support at 23,300 and make a move towards 24,000. Immediate support is placed around the 23,400-23,500 zone, while resistance is seen near the 23,900-24,000 range, according to Hitesh Tailor, Technical Research Analyst at Choice Broking.

Long-term market outlook remains weak, but a pullback is likely to continue if the Nifty manages to trade above 23,600/75,300. On the higher side, the Nifty 50-day SMA at 23,850/75,900 would be a key level to watch. A move above 23,850/75,900 could lead to a test of the 20-day SMA or 4,000-24,100/77,000-77,300. On the downside, a fresh sell-off is possible only if the index breaks below 23,600/75,300. Below this level, it could retest 23,400/74,500. Further decline may also continue, potentially dragging the index down to 23,200-23,000-23,850/74,300-73,700-73,300, according to Shrikant Chouhan, Head Equity Research at Kotak Securities.