Home / Markets / Stock Markets /  Sensex rebounds 450 points. Analysts warn of high volatility in coming days too

Indian markets rebounded today after suffering a sharp selloff in the previous session, triggered by concerns about a new variant of coronavirus in the UK. The Sensex rose over 450 points to settle at 46,006 in a session marked with high volatility while Nifty ended 1% higher at 13,466.

Strong buying in the IT and pharma majors combined with some recovery in the other sectors helped the benchmark to pare intraday losses and settle around the day’s high as well. The Nifty IT index jumped 3.3%, led by strong gains in Infosys, HCL Tech and Tech Mahindra. The Nifty pharma index rose 2.2%.

The broader markets too witnessed recovery and both the midcap and smallcap index posted decent gains of about 1% each. Despite today's rebound, analysts remain cautious and warn of high volatility in coming sessions.

"We expect volatility to remain high in the following sessions too. Traders should proactively manage their positions and avoid unnecessary overnight risk. Defensive pack viz. IT, pharma and FMCG is looking comparatively strong and should be preferred for buying trades in case the rebound extends further. On the flip side, banking and metal may trade subdued so plan your positions accordingly," said Ajit Mishra, VP - Research, Religare Broking Ltd.

Echoing similar views, Vinod Nair, Head of Research at Geojit Financial Services, said: "Volatility is expected to stay high in the near-term due to strict lockdown impacting economic recovery. However, the market is expected to remain bullish in the medium to long term, backed by overall progress in economic activity in 2021."

On Monday, the main indexes tumbled 3% and snapped six straight sessions of gains amid a global selloff as fears of a new coronavirus strain in the UK kept investors on the edge. Today however stocks rebounded in Europe after their biggest drop in almost two months as Brexit talks continued and the US passed a coronavirus relief bill.

Manish Hathiramani, Vinod Nair, Head of Research at Geojit Financial services, says, "Yesterday's fall has made traders nervous and since the volatility is high, the stops will be large too. It is therefore advised to wait and watch for a few days till a clear direction is confirmed. 13100-13150 is medium-term support for the Nifty and if that were to break, we could slide down to 12800."

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