Sensex recovers 450 pts from day's low, Nifty near 25,750: Stable IT earnings, 5 other key reasons behind markets paring losses

Stock market today news: Sensex, Nifty see value buying in trade. 

• Sensex and Nifty recovered over 350 points from day's lows in a volatile session.
• Optimism on India-US trade talks and steady IT earnings aided market rebound.
• Banking stocks and positive global cues also supported recovery.

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The benchmark indices Sensex and Nifty recovered near 450 points from the day's lows in a volatile session on Tuesday, helped by optimism around India-US trade talks and a steady start to the earnings season.

The Sensex, which had climbed 379.86 points or 0.45 percent to a day's high of 84,258.03 in early trade, later dropped 679.47 points from the peak to touch a low of 83,578.56.

The broader Nifty slipped below the 25,750 mark to 25,700.85 after rising to an intraday high of 25,899.80.

However, by 3:15 p.m., the markets turned trimmed losses again as the Sensex was trading at 83,702.26, while the Nifty was at 25,747.45.

ETERNAL, Oil & Natural Gas Corporation and Tech Mahindra were among the top gainers in the Nifty50 pack, rising up to 3 percent, while Larsen & Toubro and Jio Financial Services were among the major laggards, declining up to 2 percent. Market breadth was positive as about 2027 shares advanced, 1463 shares declined and 175 shares unchanged.

Key reasons behind market rebound

1) Value buying: Value buying emerged at lower levels after profit booking dragged markets down earlier in the session. Markets had opened on a firm note after both indices ended about 0.4 percent higher on Monday, snapping a five-session losing streak that had pulled the benchmarks down by nearly 2.5 percent.

2) Trade optimism: Investor sentiment was supported by hopes of renewed momentum in India-US trade talks after US Ambassador to India Sergio Gor said the two countries would discuss trade issues. The assurance lifted risk appetite in a volatile session and aided the recovery in domestic equities.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said "From the Indian market perspective, the necessity of a US-India trade agreement was evident yesterday when the market bounced back sharply when the US ambassador Sergio Gor declared that the US is determined to have a trade agreement with India and the talks will resume as early as January 13th."

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3) Stable start to IT earnings: The earnings season began on a steady note with Tata Consultancy Services posting a marginal revenue beat in the December quarter, driven by artificial intelligence demand and growth in the North America market. HCLTech also reported a revenue beat and narrowed its annual revenue growth forecast, lending support to IT stocks.

4) Inflation data: The retail inflation rose to 1.33 percent in December from 0.71 percent in November, remaining below the Reserve Bank of India’s medium-term target range of 2–6 percent, keeping expectations of a possible rate cut.

5) Positive gloabal cues: Asian indices including South Korea’s Kospi, Japan’s Nikkei 225 and Hong Kong’s Hang Seng traded higher, while US markets ended in positive territory on Monday.

6) Buying in bank shares: Banking stocks also recovered from early losses, with the Nifty Bank index rising up to 0.3 percent. HDFC Bank gained 0.6 percent after CLSA reiterated its "Outperform" rating on the stock.

Technical view

Devarsh Vakil, Head of Prime Research at HDFC Securities, said "A sustained move above 25,800 could extend the rally toward the next resistance levels at the 50-day and 20-day DEMAs, positioned near 25,900 and 26,000, respectively. On the downside, the recent low of 25,473 may provide short-term support."

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