Indian equity benchmarks extended their gains on Friday, with the Nifty 50 reclaiming the 23,100 mark and the Sensex rising more than 500 points, as buying interest continued after the previous session's breakout from a five-day trading range. The Nifty 50 was trading at 23,102.60, up 165.85 points or 0.72%, while the Sensex advanced 544.50 points or 0.73% to 74,695.54.
The rally follows a recovery on Thursday, when the Nifty gained 237.90 points, or 1.05%, to close at 22,936.75. Improved technical indicators, continued domestic institutional buying and broader participation across sectors have supported the recovery. However, weakness in global technology stocks and renewed foreign fund selling remain concerns.
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Here are three reasons why the stock market is rallying today.
Technical Breakout
The Nifty's move above its recent trading range has improved its short-term technical outlook. The index broke out of the 22,400-22,800 range that had restricted its movement over the previous five sessions.
Hitesh Tailor, Technical Research Analyst at Choice Broking, said the Nifty formed a bullish candle on Thursday and moved above its 20-day exponential moving average (EMA). Its relative strength index (RSI) improved to 50.85, above its average of 44.75, indicating strengthening momentum.
Tailor placed immediate support at 22,800-22,850 and resistance at 23,100-23,200. He said follow-through buying would be important to sustain the breakout.
Devarsh Vakil, Head of Prime Research at HDFC Securities, also highlighted the Nifty's breakout from its recent narrow trading range. He identified 23,175 as an important resistance level, where the previous swing high and the 50-day exponential moving average converge.
Vakil placed support at 22,650 and said traders should maintain a positive bias as long as the index holds above this level.
DII Buying
Domestic institutional investors (DIIs) continued to support the market, helping absorb selling by foreign institutional investors (FIIs).
On Thursday, FIIs turned net sellers, recording equity outflows of Rs 943 crore and ending their two-session buying streak. DIIs, however, remained net buyers for the second consecutive session, purchasing equities worth Rs 1,924 crore.
Tailor said continued DII buying could help absorb intermittent selling, although renewed FII outflows may restrict further gains.
Broad-Based Gains
The previous session's recovery extended across several sectors, indicating wider participation in the market rally. Realty, FMCG, banking, media and information technology stocks led the gains on Thursday.
The Nifty recovered from an intraday low of 22,656.75 and closed near the day's high at 22,936.75, reflecting buying interest across sectors.
However, global sentiment remains cautious following weakness in US technology stocks. Concerns over heavy artificial intelligence-related spending and mixed corporate earnings have weighed on investor sentiment.
Developments in US-Iran relations, movements in crude oil prices and upcoming US inflation data will also influence market direction, according to Tailor.
After Thursday's sharp recovery, the market could see some consolidation amid mildly negative global cues. Tailor said the ability of the Nifty to hold its recent breakout zone, along with continued domestic institutional buying and broader sectoral participation, would be important for sustaining the positive momentum.
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