Sensex rises 600 pts from day's low, Nifty reclaims 24,700: Three reasons behind market recovery

Sensex, Nifty rise in Monday's trading session amid positive cues. 

The benchmark indices rebounded on Monday, recovering from early losses as buying interest returned amid optimism around the upcoming RBI policy and strong GDP numbers.

After tumbling 796.75 points or 0.97 percent to 80,654.26 in intra-day trade, the Sensex witnessed volatile trends and later ended 77.26 points or 0.09 percent lower at 81,373.75.

The Nifty dipped 34.10 points or 0.14 percent to settle at 24,716.60. During the day, it dropped 224.55 points or 0.90 per cent to 24,526.15.

However, by mid-day, sentiment improved and the Sensex pared losses to trade at 81,315.89, up over 600 points from the day's low, while the Nifty climbed back above the crucial 24,700-mark to quote at 24,713.50.

Here are the three key reasons behind the market reversal:

1) Steady GDP Print Lifts Confidence: India’s gross domestic product (GDP) grew by 7.4 percent in the March quarter, according to the data released by the National Statistical Office (NSO). Though lower than the 8.4 percent growth recorded in the same period last year, the figure was broadly in line with market expectations.

For the full financial year 2024-25, the economy expanded by 6.5 percent, down from 9.2 percent in the previous year. Despite the moderation, analysts said the numbers reflect resilience in domestic demand, helping shore up investor confidence.

"On the domestic front, the tailwinds are getting stronger with the latest Q4 GDP growth data coming at 7.4 per cent, which is much better-than-expected," V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

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2) Rate Cut Hopes Ahead of RBI Policy: Expectations of an interest rate cut by the Reserve Bank of India (RBI) in its upcoming monetary policy review also buoyed sentiment. According to a Moneycontrol poll, economists and treasury heads anticipate a 25 basis points reduction in the repo rate when the Monetary Policy Committee (MPC) meets on June 6.

Cooling retail inflation — with CPI remaining below the RBI’s 4 percent target for three straight months — has strengthened the case for monetary easing, experts noted. Markets are now pricing in a dovish tilt, with the central bank likely to shift focus towards supporting growth.

MPC Poll | RBI likely to cut repo rate by 25 bps in June policy

3) Rupee Gains Against US Dollar: The Indian rupee appreciated by 12 paise to 85.43 against the US dollar in early trade, aided by a weaker greenback and firm domestic macro data. The local currency’s strength added to positive cues, though gains were capped by foreign fund outflows and volatility in equities.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.