The market witnessed the sharpest ups and downs in 6 months before closing in the green.

India’s stock benchmarks staged the sharpest intra-day recovery in six months on Friday, supported by buying in large-cap stocks by foreign investors. In a bullish scenario, analysts expect Nifty to cross 25000 mark early next week, where it is expected to face stiff resistance.

The last time Nifty and Sensex were in a wide range was on June 5, a day after the Lok Sabha election results showed a third term for the National Democratic Alliance government.

Nifty closed 0.9% up at 24768.30, while Sensex closed 1.04% up at 82133.12 as foreign portfolio investors (FPIs) bought provisionally priced shares. 2335.32 crore, even though DIIs made provisional net sales Shares worth Rs 732.2 crore. Analysts expect an extended rally on Monday as both indices closed near the day’s highs.

However, before the recovery, Nifty gained 611.50 points or 2.5% between the day’s low of 24180.80 and high of 24792.30. It was the sharpest swing since June 5 when the bellwether jumped 878 points, or 4%. From a low of 21884.5 on June 4, Nifty rose 20% to a high of 26277.35 on September 27.

Sensex jumped 2131.10 points

On Friday, the Sensex swung 2131.10 points or 2.66% between the day’s low 80082.82 and high 82213.92, the most since June 5, when it swung 2655 points or 3.69% between the low and high. From a low of 70234 on June 4, the index rose 22% to a record high of 85978 on September 27.

“It is possible that the market may be slightly higher due to institutional buying and less participation from FPIs,” said Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies. Low volume means that buying in relatively small amounts can cause rapid market changes.

The market’s recent decline in late September was driven by selling by FPIs, but was tempered by buying led by domestic institutional investors. Recently, FPIs have become buyers.

From October to December 12, the total net selling by FIIs has been 92,863 crore, while net purchases by DII stood at 1.57 trillion. Although DII purchases exceeded net sales by foreign investors, in the absence of FPI purchases in the cash market, the huge supply could not be absorbed through initial public offerings and qualified institutional placements, leading to a market decline.

For example, during October and November, just five IPOs—including Hyundai Motor India, Swiggy, NTPC Green, Vaari Energies and Afcons Infra—and a QIP by Zomato—covered the entire gap. Between October and December 12, there was a turnover of Rs 64280 crore between DII buying and FII selling. Certainly, FIIs have been net buyers Rs 22,766 crore in the month to December 12, according to NSDL data, following heavy selling in October-November due to disappointing second quarter earnings.

market boom

Nifty fell 3014 points or 11.5% from its lifetime high of 26277.35 on September 27 to hit a low of 23263.15 on November 21, while Sensex fell 10.67% or 9175 points from its lifetime high of 85978.25 on September 27 to hit a low of 76802 on November 21. But he came. From there, the market has been buoyed by the resumption of FPI flows betting on retail buying and improvement in corporate earnings.

Rohit Srivastava, Founder, IndiaCharts, like Avendus’s Hollande, expects some more enthusiasm to drive the rally further. He expects Nifty to test 25130, which is 1.4% away from Friday’s close.

When markets fall as they did in the three weeks to November 21, they tend to retrace to certain technical levels, known as Fibonacci retracement levels that indicate resistance and support.

For example, between September 27 and November 21, the Nifty fell 3,014 points. Retracement levels are 23.6%, 38.2%, 50%, and 61.8% before resuming its original directional move.

Retracement and resistance

Nifty has to test the 61.8% retracement after gaining 6.5% from the November 21 low till Friday’s close. It is at 25126. If it remains above this level for a few days, it could fall shy of its September 27 high of 26277.35.

“The 61.8% retracement is where I think Nifty will face stiff resistance,” Srivastava said.

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Friday’s Nifty index movers included Bharti Airtel, ICICI Bank, HDFC Bank, ITC and Reliance Industries, which contributed three-fifths of the Nifty’s 219.6-point gain.

According to Srivastava, the rally in the markets could be supported by heavyweight Reliance, which has seen the highest increase in short futures positions in 18 years. Total shorts in Reliance stand at 197.84 million shares compared to 241 million shares seen on May 8, 2006. He said that the rise in Reliance could be due to short-covering.