Is Stock Market Set for a Short-Term Bounce?

Fear gauge India Vix jumped 9% intraday to 16.31, reflecting the bitter battle between bulls and bears

- Ram Sahgal

The corrective phase of India's stock markets is expected to continue, but a short-term bounce appears possible with bulls managing to defend the strong support of 22,800 points for a third time on Monday, according to market analysts.

The benchmark Nifty 50 index recovered twice in the recent past from around that level despite relentless selling by foreign institutional investors (FII) on the back of global tariff tensions and rising US bond yields.

On Monday, bears pushed bulls by breaching the 22,800 level initially, dragging down the Nifty 50 to 22,725.45 points. The bulls fought hard to retrieve that level, succeeding finally after three intraday attempts. The Nifty 50 ended Monday at 22,959.5, up by a tenth of a percent, amid heightened volatility and FII selling.

The US benchmark yield has risen from 3.7% in mid-September to over 4.5% on inflationary fears amid US President Donald Trump's increased tariffs on all imports into that country. This has sparked over $21 billion outflows from India since October, causing the rupee to fall 3.7% since the end of September to 86.88 to the US dollar as on Monday.