Sensex rises 400 pts from day's low, Nifty near 25,350: Three reasons behind markets trimming losses

Sensex recovers 300 pts from day's low, Nifty above 25,300: Three reasons behind markets paring losses

• Sensex and Nifty recovered after gap-down, staying above key support levels
• Economic Survey projects 6.8-7.2% GDP growth for FY27, boosting market sentiment
• Decline in FPI outflows and value buying ahead of Budget aided market recovery

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Benchmark indices Sensex and Nifty staged a significant recovery on January 30 after a gap-down opening. Sensex recovered 400 points from day's low while Nifty was hovering near the 25,350-mark.

At 2:05 pm, the Sensex was down 204.65 points or 0.25% at 82,361.72, and the Nifty was down 71.50 points or 0.28% at 25,347.40. About 2,228 shares advanced, 1,575 shares declined, and 138 shares were unchanged. Sensex's intraday low was 81,941 and Nifty's day's low was 25,218.

Among top Nifty gainers are Apollo Hospital, Tata Consumer Products, Nestle, Dr Reddy's Labs, ITC.

Three reasons behind markets paring losses:

1. 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.

"The Economic Survey projects GDP growth of 6.8 to 7.2% growth in FY 27. With 3.5% headline inflation, India is headed for around 10% nominal GDP growth in FY27. This has the potential to deliver 15 to 17% earnings growth in FY 27, imparting resilience to the market," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

2. Decline in FPI outflows

The steady decline in FPI outflows during the last two days indicate a possible change in FPI strategy, said Vijayakumar.

3. Value buying ahead of Budget

Investors are expecting value buying ahead of Union Budget on February 1 as a flurry of market-friendly announcements are expected.

"In the current global backdrop, investors expect the budget to emphasise on self-reliance in production and technology such as defence, space and semiconductors while still prioritising capital spending on infrastructure," Phanisekhar Ponangi, co-founder and head of investments at wealth management platform Mavenark told Reuters.

Global brokerage Jefferies expects government capex growth of around 10%, strong emphasis on defence in Budget 2026.

Defence capex growth of 20% to benefit defence PSUs and allied companies, higher PLI allocations to support EMS players like Dixon Tech, said Jefferies.

Renewables, electronics manufacturing, consumer durables will be in focus depending on budget announcements, it said.

Solar irrigation pump allocations could aid renewable stocks and pay-commission provisioning may help consumer durables, added Jefferies.

Life insurance stocks could gain from any rise in tax-relief investment limits for traditional policies, the brokerage.

Banks could benefit from deposit growth measures; affordable housing lenders from possible interest subsidy expansion, Jefferies further said.

Technical View

"For trend-following traders, now 25,200/82,000 and 25,150/81,700 would act as key support zones. As long as the market is trading above these levels, the pullback formation is likely to continue. On the higher side, 25,500/82,800 would be the immediate hurdle for the bulls. A successful breakout above 25,500/82,800 could push the market up to 25,600-25,650/83,100-83,300. On the flip side, below 25,150/81700, the uptrend would become vulnerable. Buy Nifty between 25,350 and 25,250. Keep a stop loss below 25,200," said Shrikant Chouhan, Head – Equity Research, Kotak Securities.