Nifty 50 Stages Smart Rebound to 25,088 After Sunday's Sharp Crash
Following a sharp 2% crash during the special trading session on Sunday, primarily dragged by concerns over a higher Securities Transaction Tax (STT), the Nifty 50 staged a smart rebound in Monday's session. The benchmark index surged 263 points, or 1.06%, to recover about half of the previous day's losses and settle above the psychological 25,000 mark at 25,088.
Auto and Metal Stocks Lead the Rally as Sentiment Improves
The rally was largely led by auto stocks, as sentiment towards the sector improved following higher-than-expected January wholesale figures. Value buying in select heavyweights also supported the market's recovery, indicating that investors are capitalizing on opportunities after the recent correction.
In addition, a recovery in metal stocks aided overall market sentiment, while a sharp retreat in crude oil prices led most oil and gas stocks to close with solid gains. This sectoral performance highlights the diverse drivers behind the rebound.
Analysts Cite Budget Continuity and Geopolitical Easing as Key Factors
Ajit Mishra, SVP of Research at Religare Broking, noted that market sentiment improved as investors digested the implications of the Budget and turned to value buying in frontline stocks after the sharp correction. However, he cautioned that mixed global cues and lingering policy-related uncertainties capped the upside, keeping the recovery measured rather than aggressive.
Vinod Nair, Head of Research at Geojit Investments Limited, pointed out that the market witnessed a smart recovery following the previous day's volatile session, which was triggered by concerns over the STT hike on F&O and the government's higher borrowing plan for FY27. He emphasized that the Budget's policy continuity, with a clear emphasis on growth and fiscal prudence, helped reinforce confidence in the medium- to long-term earnings outlook.
Geopolitical Tensions Ease, Supporting Risk Appetite
Geopolitically, tensions in the Middle East are showing signs of easing after US President Donald Trump said on Saturday that Iran was 'seriously talking' with the US, shortly after Iran indicated that arrangements for talks were progressing. This development comes amid weeks of heightened tensions, with Trump repeatedly threatening intervention if Iran did not halt the killing of protesters or agree to a nuclear deal, while Tehran warned of retaliation—developments that had earlier dampened risk appetite.
Technical Analysis: Resistance at 200-DMA Limits Upside
Although the Nifty 50 reclaimed the psychological 25,000 mark, analysts do not see a sustained rally as long as the index remains below the 200-Day Moving Average (200-DMA). Nilesh Jain, Head – Technical and Derivatives Research Analyst at Centrum Broking Ltd, said, "The markets staged a sharp rebound from oversold levels, with the Nifty closing above the 25,000 mark, largely driven by short covering. However, the immediate resistance is placed at the 200-DMA around 25,210, and a decisive move above this level would confirm a short-term trend reversal."
On the downside, Jain sees immediate support at 24,800, followed by 24,680. The Relative Strength Index (RSI) has reversed from oversold territory and is trending higher, indicating improving momentum. Meanwhile, India VIX cooled off sharply by 9% to close near 13.8; a further decline would add comfort for the bulls. "Overall, the structure appears constructive for a follow-up move towards the 25,200 zone," he further added.
Expert Views on Key Levels and Market Strategy
Ajit Mishra echoed similar views, noting that the 200-Day Exponential Moving Average (200-DEMA) around 25,150 remains a key resistance. He said a sustained move above this level could help improve sentiment and pave the way for a gradual recovery. Given the mixed signals and elevated volatility, he advised investors to maintain a selective, stock-specific approach and focus on disciplined, risk-managed trades.
Ponmudi R, CEO of Enrich Money, highlighted that the recent rebound from the lower end of the channel near 24,679 underscores strong demand emerging at lower levels. Immediate resistance lies in the 25,150–25,200 zone, which coincides with the 200-day EMA, the upper boundary of the falling channel, and a previous support-turned-resistance area—making it a critical hurdle.
As long as the Nifty sustains above 25,000, the near-term tone remains mildly constructive; however, failure to hold this level could lead to consolidation within the 24,800–25,100 range. "Unless the index decisively breaks above 25,300 and exits the falling channel, the overall bias remains cautious to bearish, with rallies likely to attract supply at higher levels," he further noted.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
