Indian equities extended their recovery for a second consecutive session on Tuesday, with the Nifty rising 1% or 220 points to close at 22,776. The gain followed a 0.6% rise in the previous session, which had ended the index's four-day losing streak.
The rebound comes amid some easing in crude oil prices, which has helped improve risk appetite. However, analysts believe the index is approaching a key resistance zone, with the outcome of the Reserve Bank of India's policy decision likely to determine whether the recent rebound can develop into a broader recovery.
The Nifty is now approaching the 22,900-22,930 zone, which is expected to act as an important hurdle for the index. “A sustained move above 22,930 could extend the ongoing pullback rally towards the 23,100 mark,” said Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities.
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On the downside, Shah sees the 22,630-22,600 zone as the immediate support area. A decisive break below 22,600 could revive selling pressure and drag the index towards 22,450.
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The two-day rebound has brought the focus back to whether the Nifty can reclaim the 23,000 mark. The index had recently fallen sharply amid pressure from global yields, crude oil and persistent foreign outflows.
“The RBI decision will determine whether this two-day rebound develops into a broader recovery. An outcome in line with expectations could help the Nifty test 23,000, whereas a hawkish policy path or renewed pressure from crude and US yields may trigger selling near resistance,” said Hariselvan Radhakrishnan, Founder & CEO of HST Wealth.
Bank Nifty Outlook
Bank Nifty also ended higher for the second consecutive session, but the index faced selling pressure after moving towards the 55,200 resistance zone. A sustained move above 55,200 would strengthen the recovery and open the way towards the next resistance at 55,500-55,700, Ponmudi R, CEO of Enrich Money said.
On the downside, failure to sustain above 55,000 could signal renewed weakness. The 54,500-54,400 zone is likely to provide immediate support, followed by the psychological 54,000 level.
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