Sensex Jumps 500 Pts, Nifty Tops 25,200 as Markets End in Green – What are the Key Drivers Behind the Rally?

The Indian stock market closed with gains today, on July 23, bouncing back from yesterday's marginal fall, buoyed by optimism surrounding US-Japan trade agreements, which have raised hopes for further trade deals.

The Sensex rose by 539.83 points, or 0.66%, to close at 82,726.64, while the Nifty 50 went up by 159 points, or 0.63%, to settle at 25,219.90. The rally was supported by broad-based buying across all sectors, especially in auto and bank stocks.

Top Gainers And Losers:

Top Nifty gainers were Bharti Airtel, Shriram Finance, Apollo Hospitals, Bajaj Finance, Jio Finance, Maruti, and Bajaj Auto. With Bharti Airtel rising up to 2.20%.

While, Hindustan Unilever, Infosys, Grasim, BEL, Ultra Tech Cement, Tata Steel and ONGC
were the top losers of the day.

In the broader market, the Nifty Midcap 100 rose by 0.34%, while the Nifty Smallcap 100 and the BSE Smallcap index ended flat. The BSE Midcap also saw a modest gain of 0.24%.

Among the sectors, Auto, Financial Services, IT, Metal, Pharma, Consumer Durables, Oil & Gas, Private Banks, PSU Banks, and Telecom saw gains of 0.5% to 1%. On the other hand, Realty dropped the most by 2.6%, followed by Media which fell 1%, and FMCG, down 0.5%.

Nifty Auto emerged as the best-performing sector, driven by strong gains in Tata Motors and Apollo Tyres. While, Nifty Realty was the worst performer, with Brigade Enterprises and Oberoi Realty among the top losers.

Market sentiment remained positive, with 1,998 stocks advancing, 2,032 declining, and 168 unchanged on the BSE from 4,198 traded stocks.

What Caused the Market to Rise Today?

The Benchmark indices ended in green boosted by hopes from US-Japan trade agreements, which increased expectations for more trade deals. Talks between the US and China planned in Stockholm also lifted market mood. Investors were also waiting for earnings results from major companies like Infosys and Dr. Reddy's, expected later today.

"The Indian equity market demonstrated resilience despite a mixed start to Q1FY26 earnings. Positive global cues, underpinned by optimism surrounding the U.S.-Japan trade agreement, have supported sentiment. Additionally, progress toward finalising the India-UK FTA has further contributed to the constructive outlook.

Continued advancements in global trade negotiations are expected to alleviate near-term trade tensions and foster greater market stability. While elevated valuations remain a concern, the prevailing market strength indicates potential for near-term earnings recovery. However, the pace and sustainability of this recovery will be critical in shaping the market's forward trajectory," said Vinod Nair, Head of Research, Geojit Investments.

Technical Outlook for Nifty:

"Nifty has moved above the 21-day EMA on the daily timeframe, indicating an increase in bullish sentiment, supported by improved optimism following the trade deal between the US and Japan. The RSI on the daily chart is in a bullish crossover and rising above the 50 mark, further reinforcing the positive momentum.

In the short term, sentiment is likely to remain optimistic. On the higher side, Nifty may move towards 25,500, while support is placed at 24,900. A break below this level could weaken the current trend," said Rupak De, Senior Technical Analyst at LKP Securities.

"The tug of war between the bulls and the bears continues. Nifty is failing to cross and sustain above the 40HEMA, which has now moved lower to 25104 Sustaining above the 40HEMA and closing above the high hourly high of 25182 can hint towards trend reversal as it would reinforce a higher top, higher bottom formation. Low of 24882 will be an important support level," said Vikram Kasat, Technical Analyst at PL Capital.

Rupee VS Dollar:

The Indian rupee closed 4 paise lower against the US dollar at 86.41 on Wednesday, compared to 86.37 on Tuesday.

"Rupee traded flat in a narrow range near 86.40, with marginal movement of 0.01% against the dollar. The dollar index also remained steady around 97.40 as markets awaited further cues. Domestic capital markets gained 0.65%, while Fed Chair Powell's recent speech kept the dollar range-bound.

Attention now shifts to next week's U.S. interest rate decision, which will be a key directional trigger. Rupee is expected to trade within a range of 85.80-86.70," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

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