Sensex jumps nearly 3,000 points in 3 days. Has the market found its bottom or too early to celebrate?

Indian equity markets extended their recovery for a third straight session on Wednesday, with the BSE Sensex surging nearly 3,000 points over the past three trading days. This raises a key question on Dalal Street — has the market found its bottom, or is the bounce premature?

The Nifty closed at 23,777, in a session marked by range-bound trade. The index moved between 23,618 and 23,862 before ending higher, while the Sensex climbed over 700 points intraday, reflecting sustained buying interest.

The rebound has been largely driven by sectoral rotation and short covering after the recent sharp correction. IT stocks led the gains, with Jio Financial Services jumping 4.6%, while Tech Mahindra and Eternal advanced 3-3.5%. However, defensives such as Cipla, Hindustan Unilever, and Coal India saw mild selling pressure, capping broader gains.

According to Gaurav Garg of Lemonn Markets Desk, the recovery was supported by improving global cues and stability in crude oil prices, which hovered near $102 per barrel. The easing of immediate oil-related inflation concerns helped sentiment, particularly after recent volatility triggered by the Iran conflict.

However, technical indicators suggest caution. Vishnu Kant Upadhyay of Master Capital Services said the Nifty has struggled to sustain above the 23,850 mark, which continues to act as a strong resistance zone. “The 23,850–24,000 band remains critical. Heavy call writing in this range is limiting upside momentum. A decisive breakout could push the index towards 24,200–24,300 levels, where the 21-day EMA is placed,” he noted.

Analysts are closely watching whether this recovery is a structural reversal or merely a technical bounce. Vinod Nair of Geojit Investments said the current rally is largely driven by opportunistic buying following the recent sell-off, along with short covering.”The rebound has been broad-based, with leadership from IT, realty, and auto stocks, along with participation from mid- and smallcaps,” he said.Also read: Rs 5 lakh crore added! Easing oil prices among 4 factors behind today’s D-St surge

Despite the sharp three-day rally, underlying risks remain. Analysts point out that geopolitical tensions linked to the Iran situation, elevated crude prices, and continued weakness in the rupee could limit near-term upside. In addition, global monetary policy cues remain a key overhang.

Investors are now awaiting guidance from major central banks, including the US Federal Reserve and the European Central Bank, for clarity on the interest rate trajectory amid geopolitical uncertainty. Any shift in global liquidity conditions could influence foreign fund flows into emerging markets like India.

Also read: RIL appoints 17 bankers for a potential Rs 40,000 crore Jio Platforms IPO

From a market structure standpoint, the recent fall from around 26,350 to near 23,200 levels had pushed the Nifty into an oversold zone, making a technical rebound likely. However, sustaining above key resistance levels remains critical to confirm a trend reversal.

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