Sensex rises 900 pts from early afternoon low, Nifty above 24,900: Key reasons behind market rebound

Sensex rises 500 pts from afternoon low, Nifty near 24,800: Key reasons behind market rebound

• Sensex and Nifty rebounded sharply from mid-afternoon lows
• Value buying drove a 1,800-point Sensex recovery from day's low
• Nifty F&O expiry led to sharp market movements

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Benchmark indices Sensex and Nifty staged sharp recovery from early afternoon low on March 2 as value buying emerged from lower levels after Iran-US tensions left equity markets roiled in the early part of the trading session.

At 3:20 pm, the Sensex was down 941.03 points or 1.16% at 80,346.16, and the Nifty was down 268.75 points or 1.07% at 24,909.90. About 705 shares advanced, 3,333 shares declined, and 120 shares were unchanged. Sensex rose 900 points from early afternoon low while Nifty reclaimed 24,900-mark after the indices fell as low as 2%. Sensex's afternoon low was 79,451 while that of Nifty was 24,614.

Key reasons behind market rebound

1. Value buying

Value buying was seen in the indices from lower levels as Sensex posted a massive 1,800-point recovery from day's low while Nifty stayed above the 24,900-mark.

Experience tells us that panic selling during a crisis is wrong strategy, said an analyst.

"The uncertainty related to the war in West Asia will loom large over the market in the near-term. The major risk from the market perspective is the energy risk arising from the surge in crude. Indications are that a sharp spike in crude by, say 20%, is likely only if the Hormuz Strait is closed, obstructing oil transport through the strait. There is no official confirmation of this yet. If Brent crude remains around $ 76 equity markets may remain weak but are unlikely to witness big crash.

"Experience tells us that panic selling during during a crisis is wrong strategy. Investors should refrain from selling and watch how things evolve. Data from crises during the last many decades tells us that an event like the present crisis will not have any impact on the market six months later. This is the takeaway from the market behaviour after the recent crises like the Covid crisis, Russia-Ukraine war and the Gaza conflict. The ongoing West Asian crisis is unlikely to be different. However, since a war can spring unexpected surprises, investors have to be cautious. Weakness in the market can be used to slowly accumulate high quality stocks in domestic consumption themes like banking, automobiles, capital goods and defense," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

2. Technical level

"It will be important to observe how relatively stronger sectors, especially banking, perform in the coming sessions. Their performance could determine whether the market stages a rebound or extends the decline toward the 24,800 zone.

"On the upside, 25,600 will act as an immediate and strong hurdle. A decisive move above this level could negate the prevailing pessimism and pave the way for a recovery toward 25,900," said Ajit Mishra – SVP, Research, Religare Broking Ltd.

3. Nifty F&O Expiry

With it being weekly Nifty F&O expiry, sharp movements on either side are expected.