The Indian stock market started the new financial year, FY27, sharply higher on Wednesday, April 1, tracking a rally in global markets as hopes of a possible de-escalation in the US-Iran war lifted investor sentiment.
The rebound came after US President Donald Trump said the Middle East conflict could end within three weeks, while Iran’s president signalled that Tehran had “the necessary will” to bring the crisis to an end. The remarks improved risk appetite across global markets, even as the U.S. dollar stayed under pressure and Treasury prices continued to gain.
The rally was broad-based and sharp. The Sensex surged over 2,000 points, or 2.8%, to an intraday high of 73,965, while the Nifty 50 climbed more than 600 points, or 2.7%, to touch 22,941 during the session. The sharp move added significant wealth for investors. The total market capitalisation of BSE-listed companies rose to ₹425 lakh crore, up from ₹412 lakh crore in the previous session, meaning investors gained nearly ₹13 lakh crore in a single session.
The key question now is whether this rebound has enough strength to take the Nifty 50 above the crucial 23,400 mark, or whether this is just another short-lived relief rally in an otherwise fragile market.
Relief rally, but not yet a full-blown bullish reversal
Aakash Shah, Technical Research Analyst at Choice Equity Broking, said April had started on a positive note for the markets, but the rally still looked more like a relief move than the beginning of a sustained bullish trend.
“April has begun on a relatively positive note for the markets, with a clear relief-driven momentum emerging after a sharp correction. However, the broader tone remains one of measured optimism, not full-fledged bullish conviction. The current rally in Nifty appears to be a relief-driven bounce, supported by oversold technical conditions and hopes of Middle East de-escalation,” stated the expert.
He further noted that the recent correction had pushed the Nifty into an oversold zone, which historically tends to trigger stabilisation and rebound moves. He said this has led to short covering and a sharp improvement in sentiment, helping the index move higher in the near term.
“From a technical perspective, Nifty had entered an oversold zone after its recent decline — a level where markets historically tend to stabilize and bounce back. This has triggered short covering and improved sentiment, pushing indices higher in the near term with strong resistance placed at 23,000 – 23,300 and support at 22,600–22,444.”
He further noted that the Nifty has already corrected more than 15.40% from its peak, bringing valuations closer to long-term averages — a zone where downside historically begins to get limited and bounce-backs become more common.
However, Shah cautioned that the market’s next move will depend less on geopolitical headlines and more on the direction of crude oil prices. He said that as long as crude remains above $100 per barrel, the upside in equities is likely to remain capped because elevated oil prices directly affect inflation, fiscal balances and corporate earnings, particularly for an oil-importing economy like India.
In the short term, the expert sees room for the rally to continue for another one to three weeks, driven by short covering and improving sentiment. But beyond that, he said, the outlook becomes more uncertain unless crude cools, foreign institutional investor (FII) flows return and earnings visibility improves.
What technical indicators and options data are signalling
Vishnu Kant Upadhyay, AVP, Research at Master Capital Services Limited, also believes that despite Wednesday’s strong rebound, the broader technical structure of the market continues to remain weak.
“From a technical perspective, the market structure continues to remain weak. The index is trading well below its 10-day and 21-day EMAs, placed around 23050 and 23550, respectively. As long as prices remain below the 21-day EMA, overall sentiment is likely to stay fragile.”
He said a decisive close above the 23,550–23,600 zone would be essential to revive bullish sentiment in a meaningful way. On the downside, he sees immediate support around 22,280.
Options data also suggests that while traders are seeing some support emerge, the market has not yet fully turned decisively bullish.
“In the derivatives segment, notable call writing activity was seen at the 22,500 strike, with additional buildup at the 22,600 strike. On the put side, strong writing interest was observed at the 22,300 and 22,200 strikes, indicating these levels may serve as near-term support,” said Hitesh Tailor, Research Analyst at Choice Equity Broking.
Taken together, the technical setup suggests that while the Nifty may continue to recover if geopolitical tensions keep cooling, a move above 23,400 will likely require more than just relief from war headlines. Lower crude prices, stronger institutional flows and better earnings confidence may be needed for the market to turn sustainably bullish again.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
