Sensex rises 300 pts from day's low, Nifty above 25,200: 4 key reasons behind market recovery

Sensex, Nifty rise amid value buying.

The benchmark equity indices pared early losses on Monday, recovering sharply in the last hour of trade, supported by firm global cues and buying in select realty, banking and financial shares.

Sensex, which had declined 451.82 points to 82,049.00 in early trade, recovered nearly 300 points to settle at 82,327.05. The Nifty also regained to 25,227.35.

Key factors behind market recovery

1) Positive global cues: Global sentiment improved after U.S. President Donald Trump struck a softer tone on trade relations with China. Wall Street futures rose sharply in afternoon trade (India time) on Monday, signalling a firm start for U.S. markets later in the day.

Around 2:30 pm IST, Nasdaq 100 futures were up 2 percent, S&P 500 futures gained 1.5 percent, and Dow Jones Industrial Average futures advanced 1 percent. The rebound came after Trump, who had earlier threatened to impose 100 percent tariffs on Chinese goods from November 1, said over the weekend that “everything will be fine” and that the United States did not want to “hurt” China.

"Investor sentiment turned cautious after the U.S. announced a 100 percent tariff on all Chinese goods effective November 1, rekindling fears of a renewed trade war. However, President Trump’s conciliatory comments helped global markets recover," said Ponmudi R, CEO of Enrich Money.

Wall Street futures rally up to 2% on Donald Trump's 'don't worry about China' comment

2) FII buying: Foreign Institutional Investors purchased equities worth Rs 459.20 crore on Friday.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said FPI (Foreign Portfolio Investor) selling had slowed significantly in October, with FIIs turning net buyers in the cash market over the last four trading sessions of the week ended October 10.

"The cash market buy figure during the last four sessions stood at Rs 3,289 crore. Though the amount is not large, the shift in FPI strategy is significant. Valuation differentials between India and other markets have narrowed, and India’s growth and earnings prospects have improved following policy support measures," Vijayakumar said.

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3) Value buying at lower levels: After the initial dip, investors were seen buying into quality stocks in realty, banking and financial services, leading to a partial recovery in the market. The Nifty Midcap 100 index also turned positive after falling earlier in the day.

4) Easing geopolitical tensions: President Trump arrived in Israel on Monday to mark the agreement, which he described as a step towards lasting peace in the Middle East after a U.S.-brokered ceasefire between Israel and Hamas. Easing tensions typically help stabilise markets, indirectly supporting investor sentiment in India.

Nifty outlook

Anand James, Chief Market Strategist at Geojit Financial Services, said, "We will begin the week by limiting our upside objective to 25,460, as maintained last week. Volatility is expected to rise as the week progresses. The nearest support is seen at 25,230–25,215, and a direct fall below 25,113 could weaken the short-term outlook."

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