Markets staged a strong rebound on Friday, with benchmark indices closing nearly 1 per cent higher. The rupee recorded its most significant single-day appreciation since November 2022, driven by a weaker US dollar and robust domestic equity performance.

The Sensex ended 769.09 points or 0.95 per cent higher at 81,721.08, while the Nifty 50 closed 243.45 points or 0.99 per cent positive at 24,853.15. The rally came after markets opened flat, with the Sensex starting at 80,897.00 against its previous close of 80,951.99, and the Nifty opening at 24,639.50 compared to Thursday’s close of 24,609.70.

Market breadth remained positive, with 2,361 stocks advancing against 1,589 declines on the BSE, while 156 stocks remained unchanged. The session saw 98 stocks hitting 52-week highs compared to just 23 touching 52-week lows, with seven stocks each in upper and lower circuits.

“Markets witnessed some respite on the final trading day of the week, gaining nearly a percent amid mixed cues,” said Ajit Mishra, SVP Research at Religare Broking Ltd. “After a flat start, the Nifty saw a noticeable surge during the early hours of trade, followed by a range-bound move till the close.”

The rupee emerged as the standout performer, appreciating 72 paise to settle at 85.20 against the US dollar, marking a sharp 0.85 per cent intraday gain. “The rupee experienced its most significant single-day gain since November 11, 2022. This upward movement was primarily fueled by a weaker US dollar and a strong performance in the domestic equity market,” explained Dilip Parmar, Senior Research Analyst at HDFC Securities.

Jateen Trivedi, VP Research Analyst at LKP Securities, attributed the rupee’s strength to multiple factors. “The rally was driven by a decline in the dollar index to 99.34, down 0.50 per cent, coupled with renewed FII buying after recent selling pressure. The dual support from global dollar weakness and foreign inflows boosted market sentiment.”

Sectoral performance was broad-based, with all key sectors except pharma contributing to the upward move. The Nifty FMCG index emerged as the top gainer, surging 1.8 per cent driven by strong performance from ITC, which rose 2.32 per cent to 436.00 following robust March-quarter results. The Nifty IT index rebounded 1.8 per cent after declining 1.3 per cent in the previous session, while financial services and banking sectors also posted gains of 0.99 per cent and 0.83 per cent respectively.

Among individual stocks, Eternal Health led the gainers with a 3.63 per cent jump to 237.34, followed by HDFC Life Insurance which gained 3.28 per cent to 780.65. Jio Financial Services added 2.49 per cent to 281.40, while Power Grid Corporation advanced 2.46 per cent to 298.05. SBI Life Insurance rounded out the top gainers with a 2.14 per cent rise to 1,796.90.

The pharma sector bucked the trend, with the Nifty Pharma index declining 0.5 per cent. Sun Pharma was the biggest loser among Nifty 50 stocks, falling 1.72 per cent to 1,689.10 after brokerages cut earnings forecasts due to weak revenue guidance for FY26. Grasim Industries declined 0.70 per cent to 2,656.00, while Bharti Airtel and Bharat Electronics Limited posted marginal declines of 0.02 per cent and 0.01 per cent respectively.

Broader market indices also participated in the rally, with the Nifty Next 50 gaining 0.57 per cent to 67,095.90 and the Nifty Midcap 100 advancing 0.64 per cent to 56,687.75.

“The index has moved higher after finding support at the 21-day EMA. Broadly speaking, the Nifty appears to be consolidating within the range of 24,700–25,000,” noted Rupak De, Senior Technical Analyst at LKP Securities. “The short-term trend remains positive, with momentum likely to strengthen above 25,000.”

Despite Friday’s gains, both the Nifty and Sensex remained about 1 per cent lower for the week. According to Shrikant Chouhan, Head Equity Research at Kotak Securities, “The Nifty-50 Index and Sensex each lost around 0.75 per cent each in the past week. While midcap (-0.45 per cent) and small cap (+1 per cent) index outperformed during the same period.”

The weekly performance was impacted by global uncertainties, with Moody’s downgrade of the US credit outlook and renewed fiscal concerns in major economies keeping markets on edge. Foreign portfolio investors continued their selling spree, offloading ₹50.45 billion worth of Indian equities on Thursday amid concerns over US Treasury yields and implications of a proposed US tax-cut bill on federal debt.

“Global equities remained mix on expectations of a steady ramp-down of US tariffs,” Chouhan explained. “Moody’s downgrade of the US credit outlook and renewed fiscal concerns in major economies, coupled with mixed economic cues from China, kept the markets on edge.”

The earnings season has been uninspiring so far, with the Nifty-50 Index’s aggregate earnings growth at 5.8 per cent year-on-year. However, some bright spots emerged, with Honasa Consumer surging 12 per cent after analysts raised FY26 revenue estimates, citing a positive growth outlook.

International markets provided mixed cues, with the 30-year Treasury bond yield touching 5.161 per cent, its highest level since October 2023, while the 10-year Treasury note briefly breached 4.6 per cent. However, a slight retreat in US yields after a tax-cut bill narrowly cleared the House helped restore some investor confidence.

Technical analysts remain cautiously optimistic about the near-term outlook. “Technically, the recovery after retesting the crucial short-term support level — the 20-day exponential moving average (20 DEMA) — has eased some pressure,” Mishra observed. “The outlook could improve further with renewed strength in the banking and financial sectors after their consolidation phase.”

Hrishikesh Yedve from Asit C. Mehta Investment Intermediates noted that “Nifty held the support of the 21-Day Exponential Moving Average (21-DEMA) and formed a bullish candle on the daily chart, indicating strength. However, the index is still placed below the psychological resistance level of 25,000.”

Looking ahead, market participants are adopting a cautious but constructive stance. “We maintain our view of adopting a ‘buy on dips’ strategy, with a focus on selective stock picking, unless the Nifty decisively breaks below the 24,500 mark,” Mishra added.

For the upcoming week, analysts expect continued consolidation with a positive bias. The rupee is expected to trade within a range of 84.75 to 86.00, while equity markets may see selective stock picking amid global uncertainties and the ongoing earnings season. Key resistance for the Nifty remains at 25,000 levels, with support at 24,700.

Published on May 23, 2025