Indian equity markets bounced back with strength on Wednesday as the benchmark indices registered their highest single-day gains in over a month. Both the Sensex and Nifty closed the day firmly in the green, buoyed by upbeat investor sentiment driven by a newly announced trade agreement between the United States and Japan. The rally mirrored broader optimism seen across other major Asian markets.
The Sensex climbed 539 points to close at 82726, reflecting a gain of nearly 0.66 percent, while the Nifty advanced 159 points to end the day at 25219. This marked a significant move after weeks of sideways trading, where markets remained stuck in a narrow band with little directional momentum. Despite Wednesday's rally, experts caution that this movement may not yet signal a breakout from the ongoing consolidation phase.
Siddarth Bhamre, Head of Research at Asit C. Mehta, noted that the indices are still within their consolidation zone and will require stronger catalysts, such as robust corporate earnings, to make new highs. He explained that while certain companies have delivered better-than-expected profit numbers, overall topline growth has remained modest. As a result, market participants remain watchful and are not yet fully convinced of a sustained bullish trend.
Arun Kejriwal, Founder of Kejriwal Research and Investment Services, echoed a similar sentiment. He emphasized that the gains, though impressive, cannot be interpreted as a decisive breakout. He also pointed out that the much-anticipated US-Japan trade deal, which sparked the rally, has actually been deferred to the end of August. This casts some doubt over the durability of the market’s current upward move, unless further positive developments occur.
On the global front, Japan’s stock index surged by over three percent after US President Donald Trump announced a bilateral trade agreement that includes a new tariff regime and a massive fund for cross-border investments. This development sent ripples across the region, lifting markets in Hong Kong, Taiwan, Indonesia, Thailand, and the Philippines, all of which posted gains of more than two percent during the day.
Back home, foreign portfolio investors were net sellers, offloading shares worth over four thousand crore rupees, while domestic institutional investors absorbed the selling pressure by buying equities worth more than four thousand three hundred crore rupees. This balancing act between foreign and domestic flows continues to influence short-term market direction.
Sector-wise, telecom, automobile, banking, and financial stocks led the gains, with some stocks rising over one percent. On the flip side, realty, fast-moving consumer goods, and capital goods sectors witnessed moderate declines, falling by more than two percent in some cases.
Among the top gainers on the Sensex were Tata Motors, Bharti Airtel, Bajaj Finance, Maruti Suzuki, and Bajaj Finserv. These stocks recorded gains of up to two and a half percent, supported by positive sectoral sentiment and healthy institutional activity.
The midcap and smallcap segments remained subdued in comparison, with the BSE Midcap index rising just 0.24 percent and the Smallcap index inching up by 0.05 percent. Market breadth remained neutral, with an almost even split between advancing and declining stocks on the BSE. Despite the lack of broad-based strength, overall investor wealth rose significantly, with total market capitalisation increasing by nearly two lakh crore rupees.
As the week progresses, all eyes will remain on upcoming corporate earnings, global economic data, and potential geopolitical developments. While the momentum from Wednesday's rally offers a dose of positivity, investors may need stronger and more consistent triggers to push the indices out of the consolidation zone and into new territory.
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