Sensex settles 500 pts higher from day’s low, Nifty above 24,750: 5 key reasons behind market recovery

Sensex, Nifty recover from early morning declines.

The domestic benchmark equity indices settled lower on Thursday, however, recovered from intraday lows  on hopes of continued trade dialogue between India and the United States.

After a two-day rally, the Sensex declined 296.28 points, or 0.36 percent, to settle at 81,185.58 after recovering some lost ground during the afternoon trade. During the morning session, the gauge tanked 786.71 points, or 0.96 percent, to 80,695.15. The Nifty dropped 86.70 points or 0.35 percent to 24,768.35.

Hindustan Unilever, Jio Financial Services, ETERNAL, Kotak Mahindra Bank and JSW Steel were among the major gainers, rising up to 4 percent intraday.

Following are the five key factors behind the sharp recovery:

1) Trade Negotiation Hopes: Investor sentiment improved after U.S. President Donald Trump, while announcing a proposed 25 percent tariff on Indian goods, stated that trade negotiations with India would continue. Analysts believe the announcement is a negotiating tactic, and that any final tariff imposition may be lower than initially stated. Market participants remain cautious but hopeful ahead of the next round of trade talks scheduled for mid-August.

"Investors will reassess their strategies with a mix of caution and optimism after the tariffs and penalties imposed on Indian goods," Utsav Verma, head of research at Choice Institutional Equities told Reuters.

2) Decline in Crude Prices: Global benchmark Brent crude slipped 0.19 percent to $73.10 per barrel. Lower oil prices are generally positive for India, a major oil importer, as they help ease inflationary pressures.

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3) Positive Global Cues: Asian markets traded firm with Japan’s Nikkei 225 rising nearly 1.5 percent. U.S. equity futures were also in positive territory during Indian market hours, suggesting a likely upbeat opening on Wall Street.

4) Rupee Recovery: The rupee recovered 14 paise from its all-time low, tot 87.66 against the U.S. dollar, amid hopes of intervention by the Reserve Bank of India. Earlier, the currency had dropped as much as 89 paise, marking its steepest intraday fall in over three years, triggered by concerns over the new U.S. tariff announcement and penalties related to Russian crude and defence imports.

5) Hopes of U.S. Fed Rate Cut: The U.S. Federal Reserve held interest rates steady in its latest policy meeting, but internal dissent signalled a growing divide. Two Fed officials—Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller—favoured a rate cut. While Fed Chair Jerome Powell offered no clear signal on the timing of any policy easing, traders interpreted the statement as leaving room for a potential rate cut in September.

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