“Market Rebounds Strongly: Bond Yields Retreat, Volatility Eases 3% – Mid-day Analysis”

On April 18 around mid-day, the Sensex and Nifty indices were in positive territory, driven by increases in PSU banks, metals, and real estate stocks. This upward trend followed a three-day decline, which was reversed after a slight drop in US bond yields overnight, boosting investor confidence in taking on more risk. Consequently, the India VIX, a measure of short-term market volatility, decreased by 3 percent around noon.

The Sensex rose by 358.45 points or 0.49 percent to reach 73,302.13, while the Nifty increased by 132.00 points or 0.60 percent to reach 22,279.90 around noon on April 18. The market showed more advancing stocks than declining ones, with 2,332 shares gaining, 847 shares declining, and 87 shares remaining unchanged.

In addition, the broader market indices, such as the BSE MidCap and BSE SmallCap, performed better than the main benchmarks, rising by up to 1 percent each around noon on April 18.

Except for the Nifty FMCG index, all other sectoral indices were trading positively. The decline in the FMCG index was due to losses in Nestle India following concerns raised by Public Eye about high sugar levels in its Cerelac infant product.

On the other hand, the Nifty PSU Bank, Nifty Realty, and Nifty Infrastructure indices surged by over 1% each during trading on April 18.

Fundamental View

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, expects more Foreign Institutional Investor (FII) selling due to the US 10-year bond yield hovering around 4.57%. This could put pressure on large-cap stocks but may present buying opportunities for investors interested in high-quality large-cap stocks.

Vijayakumar also predicts increased activity in mid and small-cap stocks in the short term, especially those with low floating stocks. However, he notes that this area carries higher risk.

Technical View

Sameet Chavan, Head of Research in Technical and Derivative at Angel One, believes there is inherent weakness in the technical setup, with the market approaching the 22,000 mark. A breach below the 50-Day Exponential Moving Average (DEMA) could disrupt the chart structure further. The levels around 22,000 and 21,800 are seen as critical support for the bulls.

On the upside, Chavan identifies 22,350 (20-DEMA) as a potential resistance level, followed by a gap between 22,430 and 22,500 which could pose further challenges for the market’s upward movement

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