Sensex recovers 500 pts from day's low, Nifty near 25,900: 6 key reasons behind market rebound 

Stock market today: Sensex, Nifty rise. 

The equity benchmark indices Sensex and Nifty recovered early losses on Friday, supported by value buying at lower levels and improved investor sentiment after foreign institutional investors (FIIs) turned buyers.

At around 12:30 p.m., the Sensex rebounded nearly 500 points from the day’s low to trade in the green at 84,706.70, up 147.05 points or 0.17 percent, while the broader Nifty moved near the 25,900 level to trade at 25,883.25.

Earlier in the day, the Sensex declined to the day's low of 84,238.43, down 321.22 points or 0.37 percent, while the broader Nifty declined to 25,726.30, down 92.25 points or 0.35 percent.

Infosys, Max Healthcare Institute and Hindalco Industries were among the top gainers in the Nifty50 pack, rising up to 1 percent, while Sun Pharmaceutical Industries and Tata Motors Passenger Vehicles were among the major laggards, declining up to 2 percent. Market breadth remained negative as about 1375 shares advanced, 2048 shares declined and 142 shares unchanged.

Key reasons behind market rebound

1) Value buying at lower levels: Investors stepped in to buy stocks after three consecutive sessions of decline between Monday and Wednesday. The recent correction made several stocks attractive, prompting fresh buying interest as investors jumped in for bargain hunting.

2) FII buying: Foreign institutional investors turned net buyers on December 17 after remaining sellers for 14 consecutive sessions. FIIs purchased equities worth Rs 1,171 crore, while domestic institutional investors (DIIs) also supported the market with net buying of Rs 768 crore.

"On the institutional front, FIIs turned net buyers on December 17 after remaining sellers for the previous 14 sessions, purchasing equities worth Rs 1,171 crore, while DIIs also remained supportive with net buying of Rs 768 crore," Amruta Shinde, Technical & Derivative Analyst at Choice Equity Broking Private Limited, said.

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3) Shift away from AI-heavy trades: Weakness in US technology stocks also aided relative sentiment towards Indian equities. Wall Street’s main indices closed lower on Wednesday, with the S&P 500 and Nasdaq falling to three-week lows amid concerns over stretched valuations in artificial intelligence-linked stocks. The S&P 500 declined 1.2 percent and the Nasdaq fell 1.8 percent. Oracle slid 5.4 percent, Nvidia dropped 3.8 percent and Broadcom fell 4.5 percent.

"The trend of weakening AI trade is gathering pace in the US market. This trend is likely to continue in early 2026, and this will favour non-AI markets like India," said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

4) Rupee recovery: The rupee traded in a narrow range against the US dollar in early trade, supported by fresh foreign fund inflows. At the interbank foreign exchange market, the rupee opened at 90.35 against the dollar, moved up to 90.32 and also touched 90.38 during early trade.

"Indian rupee snapped its five-day losing streak, appreciating sharply by 65 paise against the US dollar. The rebound is widely attributed to suspected central bank intervention," Devarsh Vakil, Head of Prime Research at HDFC Securities, said.

5) Lower volatility: India VIX, the volatility index often referred to as the market’s fear gauge, remained near record low levels. Lower VIX readings suggest reduced expectations of sharp market swings in the near term. In Friday’s trade, the index was flat at 9.87, up 0.3 percent.

6) Buying in IT shares: India's largest IT company, Tata Consultancy Services rose 0.7 percent after it outlined a strategy to become the world's largest artificial intelligence-led tech services firm. The Nifty IT index was up 0.4 percent.

Technical view

Anand James, Chief Market Strategist at Geojit Investments Limited, said the Nifty has declined over a percentage point from the week’s peak and has slid back to last Friday’s lows.

"This offers scope for a potential rebound towards 25,980 initially. However, failure to hold above 25,850 could expose the index to levels of 25,650-25,300 or even 25,130, and may also confirm a near-term downtrend," he said.

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