Sensex settles 750 pts higher from day's low, Nifty ends near 25,700: 5 key reasons behind sharp market recovery

Sensex, Nifty see smart market rebound on November 11. 

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26 Aug, 2025 12:21

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The domestic markets  recovered sharply on Tuesday, trimming early losses as investor sentiment improved following positive global cues and renewed optimism over a possible India-US trade agreement.

The Sensex began the trade on a negative note by declining 411.32 points or 0.49 percent to 83,124.03. The Nifty dropped 125.1 points, or 0.48 percent to 25,449.25 in the early trade.

However, both the benchmark indices made a strong comeback and closed the session with significant gains.

The Sensex jumped 335.97 points, or 0.4 percent to settle at 83,871.32, while the Nifty climbed 120.60 points, or 0.47 percent to close at 25,694.95.

InterGlobe Aviation, Bharat Electronics and HCL Tech were among the top gainers in the Nifty50 pack, rising up to 2 percent, while Bajaj Finance and Bajaj Finserv were the key losers, declining up to 7 percent.

1) India-US trade deal optimism: Investor confidence improved after US President Donald Trump said the United States was "pretty close" to reaching a trade deal with India. Trump said the proposed pact would strengthen economic and security ties, boost energy exports, and encourage investments. "We’re getting a fair deal, just a fair trade deal," Trump said at the swearing-in ceremony of US envoy to India Sergio Gor, adding that talks were "getting close" to completion.

"The domestic market opened on a subdued note amid concerns over potential implications of the Delhi explosion. However, it recovered smartly and closed at the day's high, supported by global cues as the US Senate passed a bill to end the longest-ever federal shutdown.

"Importantly, the Q2 results season is nearing its end and is expected to conclude on a positive note, driven by better-than-expected performance by the broader market. The rally was sustained by gains in IT, auto, metal, and FMCG sectors," Vinod Nair, Head of Research, Geojit Investments Ltd, said.

2) Traders eye end to US shutdown: The US Senate on Monday passed a bill to restore federal funding, paving the way to end the longest government shutdown in American history. The reopening is expected to provide clarity on delayed economic indicators such as the non-farm payrolls report and offer direction on the Federal Reserve’s policy stance.

3) Fed rate cut expectations: Markets were also buoyed by growing expectations of another interest rate cut by the US Federal Reserve in December. Fed Governor Stephen Miran said on Monday that a 50-basis point reduction would be "appropriate," citing easing inflation and a gradual rise in unemployment.

4) Firm global cues: Asian markets traded higher, with South Korea’s Kospi, Japan’s Nikkei 225, and China’s Shanghai Composite Index all in positive territory. Overnight, U.S. markets ended with strong gains, with the S&P 500 rising 1.54 percent and the Nasdaq 100 advancing 2.20 percent — their biggest single-day gains since May — after the U.S. Senate moved to end the record-long government shutdown.

"The rebound in global equities and easing crude prices have supported the domestic market recovery," said Devarsh Vakil, Head of Prime Research, HDFC Securities.

5) Decline in crude oil prices: Brent crude, the global oil benchmark, fell 0.19 percent to USD 63.94 per barrel. Softer crude prices are generally supportive for the Indian economy as they help ease import bills and reduce inflationary pressures.