Sensex recovers over 900 pts from day's low, Nifty near 24,600: 5 key reasons behind sharp market recovery

Sensex, Nifty see value buying in August 7 trade.

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26 Aug, 2025 12:21

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The equity benchmark indices pared early losses and staged a smart recovery on the weekly expiry day amid fag-end buying on Thursday, as investor sentiment improved on hopes of further trade negotiations between India and the United States after reports of Trump-Putin meet.

Rebounding around 926 points from the day’s low, the Sensex edged higher by 79.27 points or 0.10 percent to settle at 80,623.26. The index traded in the red for most of the session and hit a low of 79,811.29. However, last hour buying helped recover losses and touch a high of 80,737.55. The Nifty went up by 21.95 points or 0.09 percent to 24,596.15.

Tech Mahindra, HCL Tech, Eternal, Axis Bank, Maruti, Tata Steel, HDFC Bank and Asian Paints were the gainers.

1) Hopes of softer US trade stance: A top Kremlin aide, Yury Ushakov, said on Thursday that an agreement had been reached for US President Donald Trump to meet Russian President Vladimir Putin “in the coming days,” with preparations already underway. The meeting is expected to take place next week, Russian state media RIA Novosti reported. The renewed optimism triggered a strong rebound in the auto, pharma, metals, and energy sectors and aided the market in recalling its trajectory and concluding in the green.

Vinod Nair, Head of Research, Geojit Investments Limited, noted "Although the earlier trade was weighed down by broad-based selling following steep US tariff hikes on India, sentiment improved toward the close as reports of potential peace talks involving Trump, Putin, and Zelensky which raised hopes of a softer US stance on trade."

2) Hopes of further trade negotiations: Investor sentiment was initially dented after US President Donald Trump announced an increase in tariffs on Indian goods to 50 percent, citing continued Indian imports of Russian oil. However, market experts noted that a window for further negotiations still remains.

"As such, there is no major fresh negative surprise. Moreover, a 20-day window remains for negotiations, with a U.S. trade delegation expected to visit India on August 24, which is trimming the losses in markets," said Santosh Meena, Head of Research at Swastika Investmart, speaking to Reuters.

3) Positive global cues: Major Asian indices were trading in the green, with South Korea's Kospi, Japan's Nikkei 225, Shanghai Composite and Hong Kong's Hang Seng posting gains. US markets had closed higher on Wednesday, and Wall Street Futures pointed to a positive opening, offering some support to domestic equities.

4) Rupee gains against dollar: The rupee appreciated by 5 paise to 87.67 against the US dollar in early trade at the interbank foreign exchange. It opened at 87.69 and touched an intraday high of 87.67, aided by steady foreign inflows and a softening dollar index.

5) Value buying: After the initial fall, investors looked for opportunities to accumulate quality stocks at lower levels. Heavy buying was seen in auto, pharma and IT shares, leading to a broad-based recovery across sectors.