Sensex rises 350 pts from day's low, Nifty above 26,150: 4 key reasons behind market recovery

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

The benchmarks recovered from early losses on Friday, with the Sensex rising nearly 350 points from the day's low to 85,534.70 and the Nifty moving above 26,150 as buying returned at lower levels.

The Sensex had opened weak and fell 285.28 points to 85,347.40. The Nifty also slipped 82.6 points to 26,109.55 in early trade. The indices had declined after a two-day rally, tracking weak global cues.

Key reasons behind market rebound

1) FII buying support: Foreign institutional investors continued their buying streak. FIIs purchased equities worth Rs 283.65 crore on Thursday, after buying Rs 1,580.72 crore on Wednesday.

2) Shift away from AI trade: According to analysts, India, which has underperformed in this year’s AI-driven trade, may gain if global investors rotate out of AI stocks.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said market volatility has increased, noting that the Nasdaq — seen as a gauge for the AI trade — fell 2.15 percent overnight and is down 4.4 percent from its intraday peak. He added that while concerns around high valuations in AI stocks persist, views remain divided.

"At lower valuations, fresh buying may again emerge in AI stocks," he said, adding that markets will have to wait and watch how the current volatility plays out.

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3) US futures firm up: US stock futures were up as much as 4 per ent around 1 pm IST, signalling a positive start for Wall Street later in the day.

Overnight, US markets closed lower, with the Nasdaq Composite falling 2.15 percent, the S&P 500 declining 1.56 percent and the Dow Jones Industrial Average slipping 0.84 percent.

4) Buying in auto shares: Strong buying was seen in the auto shares on Friday with Maruti Suzuki India and Mahindra & Mahindra among the top Nifty gainers. Nifty auto and FMCG were the only major sectors which were in green. M&M shares gained after the group outlined plans to achieve an eight-fold jump in consolidated revenue from its auto business by FY30 over FY20 levels, with a sharper focus on SUVs and light commercial vehicles. While Maruti Suzuki India picked up more than a 7.84 percent equity stake in Ravity Software Solutions Private Limited through the Maruti Suzuki Innovation Fund.

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