Sensex rallies 889 points, Nifty tops 24,250 as markets end higher

Indian equity benchmarks closed sharply higher on Wednesday, with the Sensex rallying 889 points and the Nifty surging past the 24,250 mark. The rally was broad-based, with buying across sectors pushing the indices to their highest levels in over a week.

Benchmarks post strong gains

The BSE Sensex jumped 889 points, or 1.13 per cent, to end at 79,842. The NSE Nifty rose 267 points, or 1.11 per cent, to close at 24,278. Both indices snapped a two-day losing streak, recovering sharply after a subdued start to the week.

The rally was led by heavyweights in the IT, banking and auto sectors. Analysts attributed the surge to short covering ahead of the monthly derivatives expiry and fresh buying by domestic institutional investors.

Sectoral indices shine

All 13 major sectoral indices ended in the green. The Nifty IT index rose over 2 per cent, with Infosys, TCS and HCL Tech gaining between 1.5 per cent and 3 per cent. Banking stocks also saw strong buying, with the Nifty Bank climbing 1.3 per cent. HDFC Bank, ICICI Bank and Kotak Mahindra Bank were the top contributors.

Auto stocks followed suit, with the Nifty Auto index up 1.2 per cent. Maruti Suzuki and Mahindra & Mahindra posted solid gains, while Bajaj Auto inched higher. The broader market also performed well, with the midcap and smallcap indices rising over 1 per cent each.

Broader market participation

Market breadth was strongly positive. On the BSE, 2,371 stocks advanced while 1,149 declined. The rally was not limited to large caps; midcaps and smallcaps also attracted buying interest, indicating broad confidence among investors.

Foreign portfolio investors were net sellers of about Rs 450 crore in the cash market, provisional data showed. However, domestic institutional investors stepped in with net purchases of over Rs 1,200 crore, providing strong support to the market.

What drove the rally

Analysts pointed to a mix of factors. Positive global cues, with US and Asian markets trading higher, helped sentiment. Additionally, expectations of stable earnings growth and lower inflation data in the coming weeks have kept the mood upbeat.

The Nifty has now recovered nearly 4 per cent from its recent low on July 22. The 24,200-24,300 zone has emerged as a key resistance level, and traders will watch if the index can sustain above this range in the coming sessions.

Options data suggest that the 24,300 strike has the highest open interest on the call side, while the 24,000 put has the highest accumulation, indicating a tight range for the near term.

What to watch next

The monthly derivatives expiry on Thursday will be the next major event. Traders are likely to roll over positions, which could add to volatility. Global cues, including the US Federal Reserve's policy decision next week, will also set the tone for the market in the short term.