Sensex recovers 300 pts from day's low, Nifty above 25,950: 5 key reasons behind market rebound

Stock market today: Sensex, Nifty see sharp recovery in trade. 

The equity benchmarks recovered early losses post noon on Tuesday, staging a sharp rebound on the weekly derivatives expiry day.

The Sensex, which had slipped 392.59 points or 0.46 percent to an intraday low of 84,558.36 rebounded over 300 points to trade at 84,865.41 around 1:30 p.m. The Nifty fell below the 25,900 mark in early deals, touching 25,877.10, but later edged up to 25,972.60.

Key factors behind the recovery:

1) Value buying: Buying emerged in key pockets after the initial decline, particularly across banking and financial stocks, providing support to the indices.

2) FII activity: Foreign Institutional Investors bought equities worth Rs 442.17 crore on Monday, according to exchange data. This came after five straight sessions of selling, offering a sentiment boost to the market.

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3) Shift from AI-heavy investments: Analysts noted that the fading AI trade is prompting some investors to rotate funds into broader emerging markets, including India. The shift is seen as aiding domestic equities as money moves out of overheated technology bets abroad.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said three factors were supporting the ongoing uptrend. "One, official sources from the White House indicate that the US is close to a trade deal with India. Two, the fading AI trade will benefit India. Three, fundamentals are improving, reflected in resilience in growth and rising earnings," he said. He added that while FII buying is a positive sign, it is “too early to call it a trend,” and said sustainability of the rally would depend on continued strength in consumption.

4) India–US trade deal hopes: Expectations of progress on the proposed India–US Bilateral Trade Agreement also aided sentiment. White House economic adviser Kevin Hassett told CNBC that the trade and tariff agreement is “close to the finish line,” expressing confidence despite the complexities in the negotiations.

On the technical front, Anand James, Chief Market Strategist at Geojit Financial Services, said Nifty continues to struggle for clear direction. "With both 26,130 and 25,840 intact, a sideways bias is likely. We expect initial slippages to 25,980 or 25,900, followed by an upswing attempt. A direct rise above 26,022 could open the way to 26,130," he said.

5) Crude declines: Brent crude, the global oil benchmark, dipped 0.47 percent to USD 63.90 per barrel.

On the technical front, Anand James, Chief Market Strategist at Geojit Financial Services, said Nifty continues to struggle for clear direction. "With both 26,130 and 25,840 intact, a sideways bias is likely. We expect initial slippages to 25,980 or 25,900, followed by an upswing attempt. A direct rise above 26,022 could open the way to 26,130," he said.

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