Markets rise for 3rd day: Sensex closes 850 pts higher from day's low, Nifty ends above 25,400; 4 reasons behind sharp recovery

Sensex recovers 200 pts from day's low, Nifty above 25,200: Three reasons behind markets trimming losses

• Sensex and Nifty trimmed losses, Sensex recovered 250 points from day's low
• FII buying and Sensex F&O expiry contributed to market recovery
• Nifty Metal index hit record high, Hindustan Copper surged 17%

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Benchmark indices Sensex and Nifty significantly recovered on January 29 closed higher for third straight day amid rise in metals, oil & gas stocks. Sensex recovered a whopping 850 points from day's low while Nifty closed above 25,400 level.

Sensex closed 221.69 points or 0.27 percent higher at 82,566.37, and the Nifty rose 76.15 points or 0.30 percent at 25,418.90. About 1,638 shares advanced, 2,426 shares declined, and 138 shares were unchanged. Sensex's intraday low was 81,707 while Nifty's day's low was 25,238.

Four reasons behind sharp market recovery

1. Sensex F&O Expiry

Volatility is usually seen on index expiry day and that was being witnessed on January 29 with it being Sensex monthly F&O expiry. India VIX, the  volatility gauge, is also up 2%.

"For day traders now, 25200/82000 would act as a key support zone. Above 25200/82000, the pullback rally could continue till 25500/82800. Further upside may also continue, potentially lifting the index to 25575/83000. On the flip side, below 25150/81900, sentiment could change, and the index may gradually fall to 25000/81500-24900/81200. The strategy should be to buy Nifty between 25300-25250, but with a strict stop loss at 25150," said Shrikant Chouhan, Head Equity Research, Kotak Securities.

Nifty, Sensex and Bank Nifty recovered over 1% on January 29 from intraday lows.

2. FII buying

Optimism could be seen returning to the markets with foreign institutional investors (FIIs) turning buyers after 15 sessions, purchasing Rs 480 crore in the cash market. Domestic institutional investors (DIIs) continued their strong buying streak, investing Rs 3,360 crore during the session.

"Markets can always surprise. Some positive news/event can trigger a rally in the market. There are rumours of a sudden announcement of a US-India trade deal. If that happens close on the heels of the path breaking India-EU-trade deal, that would be a major boost to Indian economy and corporate earnings in FY27, and therefore, the market will respond positively," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

3. Metal index extends rally

Nifty Metal index gained 1.9% to hit a record high with twelve of its 15 constituents in green.

The index is up for the third straight session, supported by a surge in global metal prices amid geopolitical risks and a weak dollar.

Hindustan Copper is top gainer on index by rising 20% to an all-time high.

National Aluminium Company rose 3%, Hindalco gained 1.8% and Hindustan Zinc gained 1%.

The benchmark three-month copper on the London Metal Exchange jumped 6.7% to an all-time high of $13,967.50 a ton.

4. Economic Survey

The survey projected India's economy to grow between 6.8% and 7.2% in the fiscal year starting in April on the back of strong domestic demand.

Although the forecast will mean a slowdown from this fiscal year's 7.4% projection, Finance Minister Nirmala Sitharaman said the outlook "is one of steady growth amid global uncertainty, requiring caution, but not pessimism."

"The FY2027 growth outlook reflects a realistic assessment of India's cyclical momentum, balancing U.S. trade and geopolitical uncertainty with the economy's relative insulation due to domestic demand and steady capex," said Sonam Srivastava, founder and fund manager at Wright Research PMS.

"The survey's emphasis on sustained credit growth leaves banks and non-bank lenders well-positioned for growth, led by retail, MSME and infrastructure-linked lending," Srivastava said.

Heavyweight financials, which were in the red before the release of the survey, closed 0.6% higher, while private banks gained 1%.

Technical View

"Technically, the index formed a bullish candlestick pattern on the daily chart. However, selling pressure is expected to emerge at higher levels. The volatility index India VIX remains above 12, indicating elevated volatility in the near term. The short-term trend remains bearish, with a sustained bullish reversal only above 25,500 levels. The 9-day SMA is placed at 25,354," said FundsIndia Equity Research.