Indian equity benchmarks, the BSE Sensex and NSE Nifty, concluded Friday's trading session in negative territory but demonstrated a remarkable comeback from their intraday nadirs. The 30-share Sensex pared significant losses to close down 120.83 points (0.16%) at 74,781.76, while the Nifty index fell 79.70 points (0.34%) to settle at 23,398.10.
The Sensex rebounded an impressive 621.6 points from its intraday low of 74,160.16, and the Nifty bounced back 166.7 points from a low of 23,231.40, indicating strong buying interest at lower levels.
Factors Behind the Market Rebound
Several elements contributed to the sharp recovery observed in Indian equities. Nifty IT and Nifty Private Bank sectors provided crucial support, offsetting pressure on Nifty Realty and Nifty Metal indices. Dr Reddy's Laboratories Ltd and HDFC Bank Ltd emerged as top gainers among Nifty constituents, while JSW Steel Ltd and Hindalco Industries Ltd were among the biggest laggards.
Value Buying and European Market Support
Vinod Nair, Head of Research at Geojit Investments, noted that the market's recovery was primarily driven by value buying in select sectors, particularly information technology. This sentiment was further bolstered by a positive opening in European markets, which often influences investor confidence in Asian markets.
Banking Sector's Role
The banking benchmark index, Nifty Bank, also experienced a significant turnaround. Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, highlighted robust short covering that triggered a nearly 890-point recovery from its daily low. The formation of a strong bullish candle on daily charts for Nifty Bank underscored increased buyer participation.
Crude Oil Price Easing
Another contributing factor was the softening of crude oil prices. Brent crude futures eased after approaching the $110-a-barrel mark, declining 3.69% to $103.66 a barrel. US WTI crude also fell 3.36% to $99.04. Lower crude prices are generally positive for import-dependent economies like India, as they alleviate concerns about inflation and corporate input costs.
Outlook Amidst Volatility
Despite the rebound, market experts suggest that broader consolidation may persist due to weak market breadth. Elevated crude prices, foreign institutional outflows, and ongoing geopolitical uncertainties are expected to maintain high volatility. However, resilient domestic fundamentals and sustained institutional support are anticipated to limit downside risks and underpin the medium-term outlook for Indian equities.
Looking ahead, SBI Securities' Shah indicated that the 23,250–23,230 zone could serve as a crucial support for the Nifty. A breach below this level might accelerate selling pressure towards 23,080. On the upside, 23,600–23,620 is identified as an immediate hurdle, with a sustained move above it potentially extending the pullback towards 23,800 levels.