The benchmark indices Sensex and Nifty staged a sharp recovery on Thursday after early losses, as investors discounted the impact of higher US tariffs and drew support from strong domestic institutional buying.
Sensex fell 693.54 points or 0.85 percent to touch a low of 80,093.52 in early trade, while the broader Nifty declined 204.75 points or 0.82 percent to 24,507.20.
By noon, the Sensex recovered 450 points from the day's low to trade at 80,543.74. The Nifty also rebounded nearly 150 points, moving above the 24,650 mark.
Hero MotoCorp, Adani Enterprises, Titan Company, Asian Paints and Adani Ports and Special Economic Zone were among the major gainers, rising up to 2 percent intraday.
Analysts cited three factors behind the rebound:
1) PM Modi’s visit to Japan, China: Prime Minister Narendra Modi’s visit to Japan and China, beginning later this week, is being seen as a positive signal for markets at a time when higher US tariffs have come into effect. Modi will attend the Shanghai Cooperation Organisation’s 25th meeting of Council of Heads of State in Tianjin on August 31 and September 1. Market participants believe such engagements could help ease global trade tensions and diversification for India's exports.
2) View that higher US tariffs are temporary: The additional 25 percent tariff imposed by US President Donald Trump on Indian imports, effective Wednesday, raised the total duty to 50 percent. While this triggered the morning sell-off, investors later took comfort from comments by US Treasury Secretary Scott Bessent, who described India-US ties as “very complicated” but expressed confidence that “at the end of the day, we will come together.”
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the market is treating the steep tariff hike as a “short-term aberration” likely to be resolved soon.
US will come together with India at end of the day: Scott Bessent as Trump's 50% tariffs take effect
3) Strong DII buying: Exchange data showed that while Foreign Institutional Investors (FIIs) offloaded equities worth Rs 6,516.49 crore on Tuesday, Domestic Institutional Investors (DIIs) purchased stocks worth Rs 7,060.37 crore.
"The strong pillar of support to the market is the aggressive buying by DIIs flush with funds. Any selling by FIIs will be easily neutralised by DII inflows," Vijayakumar said.
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.
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