Sensex settles 600 pts higher from day's low, Nifty ends above 25,550: Three reasons behind sharp market recovery

Sensex settles 600 pts higher from day's low, Nifty ends above 25,550: Three reasons behind sharp market recovery

• Sensex and Nifty rebound after previous session's sharp fall
• Value buying and positive global cues drive market recovery
• IT and realty sectors lag as other sectors see broad buying

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Benchmark indices Sensex and Nifty recovered strongly from day's lows on February 20 to close in green amid broad-based buying barring IT sector. Sensex settled 600 points higher from day's low while Nifty closed above 25,550-mark.

On February 20, Sensex closed 316.57 points or 0.38% higher at 82,814.71, and the Nifty climbed 116.9 points or 0.46% to 25,571.25. About 1,842 shares advanced, 2,167 shares declined, and 153 shares were unchanged. Intraday low of Sensex is 82,206 while that of Nifty was 25,379.75.

The Nifty 50 index rose 0.4% this week. Information technology majors were mostly responsible for limiting the gains, while energy companies lent support to the 50-stock index during the week. Larsen & Toubro rose almost 5% in the last five trading sessions, while Eternal was down 5.5% for the period.

Twelve of the 16 major sectors logged weekly gains. The broader small-caps fell 0.2% while mid-caps added 0.1%.

PSU banks were the top sectoral gainers, rising 5.5% for the week. The index added 8.9% in two weeks on post-earnings optimism. Private sector banks and financials rose 0.8% and 0.3% for the week, underperforming the PSU banks. Tech Mahindra and Infosys were the worst-hit in the index, down nearly 2% and over 1%, respectively. HCL Technologies and Wipro ended nearly 1% lower each.

India VIX - a measure of the market's expected volatility for the next 30 days - spiked 6.6% on February to 14.36, just shy of an eight-month high hit on the day of Union Budget 2026 on February 1.

Three reasons behind market rise:

1. Value buying

Value buying was seen in markets after Sensex and Nifty fell around 1.5% in the previous session. Metals and bank stocks led the gains on February 20.

Among the Sensex firms, NTPC, L&T, Hindustan Unilever (HUL), Power Grid and Tata Steel led the advances, rising as much as 2.6%. On the downside, Tech Mahindra, Eternal, Infosys, HCLTech and Bharti Airtel were among the top losers, declining by up to 1.7%.

Broader markets delivered a mixed performance. The Nifty Midcap 100 index closed 0.48% higher, while the Nifty Smallcap index slipped 0.11%.

On the sectoral front, Nifty PSU Bank and Nifty Metal indices climbed more than 1% each. Gains were also seen in FMCG, Private Bank, Oil & Gas and Auto indices. However, the Nifty IT index ended nearly 1% lower.

"The sharp spike in Brent crude to $72 reflects growing fear and uncertainty in markets. President Trump’s warning that “Iran has 10 to 15 days to strike a deal or bad things happen “ has put the markets on tender hooks. Whether there will be a deal after the standoff, or whether missiles will fly will determine the market behaviour in the near-term. The continuing weakness in IT stocks is another dampener for the market.

"Amidst the many crises, the strength of the Indian economy and the recovery in corporate earnings as reflected in Q3 numbers, are positives for the market. If, hopefully, the US-Iran standoff gets resolved in the coming days, the market will bounce back. Therefore, investors may wait and watch the unfolding developments in West Asia. Meanwhile, investors who are optimistic about a possible deal can use the current weakness in the market to buy fairly valued high quality stocks in banking and financials, autos, pharmaceuticals, hotels, leading capital goods and telecom. Crisis have proved to be buying opportunities, in hindsight," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

Nifty India Defence rose over 1%. Most constituents in the sectoral index were higher. Data Patterns (India) rose over 6% and contributed more to the gains in Nifty India Defence. Data Patterns (India) was among the top gainers in the Nifty 500. Shares of Bharat Dynamics rose nearly 3% and was among the top gainers in the Nifty 200. Thusrday, French President Emmanuel Macron said that France and India was set to jointly produce Rafale jets as well as helicopters.

2. Positive global cues

Wall Street futures were trading in mild green on February 20 even as US President Donald Trump set a deadline of 10 to 15 days for Iran to make a deal over its nuclear program or "really bad things" will happen.

"Any escalation involving Iran could impact shipments through the Strait of Hormuz, which would be particularly negative for India given its heavy dependence on crude imports from the region," Siddhartha Khemka, head of research at Wealth Management at Motilal Oswal Financial Services told Reuters.

"We expect markets to remain cautious in the near term given the geopolitical risks and possibility of oil supply disruption," Khemka said.

While the market outlook has improved, with strong earnings and attractive valuations after 16 months of underperformance, geopolitical risks persist and AI-related disruption could weigh in the near term, said Sunil Singhania, founder of Abakkus AMC.

3. Technical level

A brokerage said strong support for Nifty lies at 25,350.

"The 200-day EMA, placed near 25,200, is now the next crucial short term support zone and appears vulnerable if follow-up selling persists in the coming sessions. On the downside, immediate supports are seen at 25,350 and 25,000, which may act as key cushions in case of further weakness. On the upside, resistance is placed at 25,650, followed by 25,720, where any pullback is likely to face selling pressure," said Bajaj Broking.

"While the approach to 25900 was expected to see a slowdown in momentum, the hammering seen from this region was unexpected. The bearish engulfing candlestick formed thereof has effectively ended the uptrend that has been on in the last few days. That said, the steepness of the fall may allow a recovery move, ideally towards 25580. Alternate scenario sees Nifty consolidating inside the 25450-180 region, with low likelihood of a further collapse today," said Anand James, Chief Market Strategist, Geojit Investments Limited.

"What we are seeing today is more of a tactical bounce from Nifty 50's 200-day simple moving average (SMA) of around 25,300 points," said Naveen Vyas, head of family office at Anand Rathi Global Finance.

"We are still not out of the woods. If Brent crude surpasses $75 per barrell and stays at that level for a couple of months, that could put further pressure on Indian equities," said Vyas.