Sensex rises over 150 points, Nifty opens near 24,000 as US bonds yields slightly ease. Why is caution still warranted?

The Indian stock market experienced a positive opening on Thursday, with both the Sensex and Nifty rising by 0.35% and 0.24% respectively, marking the beginning of their session on an upward trend. The Sensex climbed over 300 points, reaching 76,900 on its weekly expiry day, while the Nifty 50 opened near 23,998. Other markets, including the Nifty Midcap 100 and Nifty Smallcap 100, also showed gains, with increases up to 0.5%.

Analyst VK Vijayakumar from Geojit Investments attributed the market's optimistic outlook to the slight easing of US bond yields, which he believes will stabilize the rupee and boost Foreign Institutional Investors (FIIs) confidence. Despite this, caution is still advised as US bond yields remain high, at nearly 5%, and oil prices remain above $95 per barrel due to ongoing concerns about the US-Iran conflict.

Despite this, Vijayakumar expects continued FII investments in India due to improving growth and earnings prospects, aided by the substantial mobilization of funds under the FCNR(B) scheme by banks, which will improve their net interest margins. The analyst noted that the recent sharp decline in Nifty, amounting to 141 points, was largely driven by retail investors, proprietary traders, and bears taking advantage of the market weakness.

Technical analysts suggest that Nifty's rise from 23,800 gives reason to hope for further gains, but a break above the 24,150-24,215 region is necessary to confirm this upward trend. Conversely, a downside marker has been set near 23,860.