Sensex surges 965 points, Nifty closes above 24,300; IT and banks lead rally

Indian equity benchmarks staged a strong recovery on Friday, with the Sensex surging 965 points and the Nifty closing above the 24,300 mark. The rally was driven by buying in information technology and private banking stocks, while metal and pharma sectors remained under pressure.

IT and banks lead the charge

The BSE Sensex jumped 965 points to end near the day's high, while the NSE Nifty crossed 24,300 for the first time in recent sessions. Tech Mahindra led the IT pack, rising sharply, as investors piled into software exporters on expectations of strong earnings.

Private bank stocks also saw robust buying. Analysts attributed this to improved sentiment around credit growth and lower provisions. HDFC Bank and ICICI Bank were among the top contributors to the index gains.

Why markets bounced back

Market participants cited multiple reasons for the rebound. First, domestic institutional investors continued to pump money into equities, providing a floor to the market. Second, some short covering ahead of the weekend added to the upward momentum.

Third, select macroeconomic data points remained supportive. Fourth, a few large-cap stocks in the IT and banking space saw fresh buying interest after recent corrections. Analysts noted that the rally came despite a selloff in global markets, highlighting the resilience of Indian equities.

Metal and pharma drag

Not all sectors joined the party. Metal stocks declined on concerns over global demand slowdown, while pharma shares faced selling pressure due to regulatory uncertainties. Nifty Metal and Nifty Pharma indices ended in the red, capping the broader market gains.

Broader market indices also underperformed the benchmarks. The BSE Midcap and Smallcap indices rose less than half a percent, suggesting that the rally was largely concentrated in large-cap stocks.

Analyst views

Analysts said the market's ability to shrug off global weakness indicates strong domestic fundamentals. One analyst told Moneycontrol that the resilience was due to consistent domestic inflows and improving corporate earnings visibility.

However, they also cautioned that volatility could persist given global cues. The US Federal Reserve's interest rate path and geopolitical tensions remain key risks, they added.

What lies ahead

Next week, investors will watch for corporate earnings reports from major IT and banking companies. The quarterly results will provide further direction on the health of the economy. Global central bank policy meetings may also influence sentiment.

The market is likely to remain rangebound in the near term, with a positive bias if domestic flows continue. Any negative surprise on the earnings front could trigger profit booking, analysts said.