Stock markets see biggest weekly gain in 4 years, adopt ‘buy on dips’ strategy

New Delhi: The Indian stock markets witnessed a strong rebound this week, with benchmark indices Nifty and Sensex surging over 4 per cent — best weekly performance in four years — and the rally was fuelled by improving investor sentiment, improvement in foreign flows and positive global developments, experts said on Saturday.

The Nifty gained over 4 per cent, the highest weekly since February 2021. The Sensex also surged 4 per cent, the most since July 2022.

The resurgence in market sentiment was fuelled by the comeback of FIIs amid a strengthening Indian rupee. Additionally, the steep correction in many stocks over recent months created opportunities for value buying, attracting investors looking to capitalise on lower valuations.

Nifty closed at 23,350.4, while Sensex ended the week at 76,905.51 — both near their weekly highs.

Benchmark indices rose for fifth straight session on Friday as broad-based buying propelled the market higher. Broader market extended up move as Nifty midcap and smallcap closed higher by 1.4 per cent and 2.1 per cent, respectively, according to Bajaj Broking Research.

“Several factors contributed to the sharp recovery. Easing pressure from foreign institutional investors (FIIs), marked by positive flows in both cash and derivatives segments, provided much-needed stability. Additionally, crude oil prices and the dollar index remained at lower levels after a recent decline, supporting market sentiment,” said Ajit Mishra, SVP, Research, Religare Broking Ltd.

Further, dovish signals from the US Federal Reserve regarding future rate cuts, coupled with reports of de-escalation in the Russia-Ukraine conflict, added to the optimism.

The rally was broad-based, with all key sectors participating. Realty, energy, and pharma emerged as the top gainers, while midcap and smallcap indices surged between 7.7 per cent and 8.6 per cent, adding to the overall market buoyancy.

According to experts, with no major domestic economic events scheduled, focus will remain on the expiry of March derivatives contracts and FII activity.

On the global front, the US markets will be closely watched, with tariff-related updates and GDP growth data expected to influence investor sentiment. Although US markets saw a temporary respite after a sharp decline, mixed signals suggest potential volatility in the coming sessions.

Traders are advised to adopt a “buy on dips” strategy, focusing on sectors that have demonstrated consistent strength. Banking, financials, metals, and energy stocks remain preferred picks, while selective opportunities can also be explored in PSU and auto stocks, said market watchers.

IANS