Sensex, Nifty erase losses on short covering, rise 0.8%, but volatility likely to prevail

Benchmark indices Sensex and Nifty wiped off early losses and edged higher towards the end of April 19 trading session. Analysts believe that the recovery came on the back of investors covering their short positions despite Israel's fresh attack on Iran. Going ahead, they suggested investors to stay put amid geopolitical tensions.

On April 19,the Sensex was up 599.34 points or 0.83 percent at 73,088.33, and the Nifty was up 154.00 points or 0.70 percent at 22,149.80. The market breadth weighed towards losers as around - 1,502 shares advanced, 1,763 shares declined, and 81 shares unchanged.

Earlier in the day, markets plunged in negative territory after Israel launched fresh attacks on Iran. This prompted oil prices to rebound from 3-week lows and gain over 3 percent. While Brent Crude topped $90 per barrel, WTI Crude breached above $85 per barrel.

Given this geopolitical uncertainity, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services suggested investors to stay put and avoid any aggressive long bets. He expects the bearish bias to persist in the near-term as higher US bond yields will keep foreign institutional investors (FIIs) away from Indian equities.

Overnight, the 10-year US treasury yield rose by nearly 5 basis points to 4.6 percent, while 2-year treasury yield advanced almost 6 bps to near 5 percent-mark.

Moving ahead, analysts at ICICI Securities expects Nifty to hold support of 21,900 amid stock-specific action as corporate earnings season accelerates. "We believe short-term consolidation would act as a base for eventual target of 23,400 by June 2024," they added.

Meanwhile, broader markets exhibited bearish trend, with BSE Midcap and BSE Smallcap indices declining up to 0.4 percent on April 19. Fear gauge India VIX jumped more than 2 percent to 13.37.

Sectorally, Bank Nifty was the top performer on April 19, gaining over a percent led by surge in HDFC Bank, ICICI Bank, and SBI. On the flipside, Nifty Pharma, Nifty Media, and Nifty Media indices were the top laggards as they slipped up to a percent.

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