Indian benchmark indices staged a sharp recovery from early losses, with the Sensex rising over 200 points to cross 73,330 and Nifty nearing 22,660 after dropping below 22,400 earlier in the day. According to reports from The Economic Times, this recovery represents a sharp recovery of more than 1% from early losses and marks the end of a four-day losing streak that had wiped out massive sums of investor wealth. The market turnaround was supported by gains in metal, pharmaceutical and select banking stocks, though analysts remained cautious amid elevated crude oil prices and rising volatility. The Sensex recovered more than 800 points after hitting the day's low at 72,515, demonstrating the significant intraday volatility experienced by investors.
Kotak Mahindra Bank shares jumped more than 2% to lead gains on Sensex, while Adani Ports, Tata Steel, Eternal, Sun Pharma, Axis Bank, Tech Mahindra, L&T, TCS and Trent shares rose 1-2% each. As reported by The Economic Times, Asian Paints, Infosys and HUL fell 1-2% and bucked the broader trend. Among sectors, Nifty Metal and Nifty Pharma jumped more than 1% each to lead gains, while Nifty IT, Nifty FMCG and Nifty PSU Bank indices slipped into the red. The overall market breadth turned positive, with NSE seeing 2,092 advances against 1,124 declines, while 104 stocks remained unchanged.
Broader markets also took relief following Friday's significant crash, with Nifty Midcap 100 and Nifty Smallcap 100 indices trading in the green with marginal gains as seen at around 10 am, according to The Economic Times. However, India VIX, which reflects market volatility, jumped 4% to remain close to 18, indicating continued market uncertainty despite the recovery. The analyst noted that the crash in the broader market was mainly due to the forced liquidation of the margin-funded trade, with the broader market continuing to be overvalued but the sharp correction opening up opportunities in high-growth segments.
From a technical perspective, the analyst noted that Friday's long lower wick points to recovery attempts, as reported by The Economic Times. He indicated that we will look for a push above 22,690 to confirm strength for the day, while inability to float above 22,460 could be taken as resumption of downsides. The weakening of the AI trade is viewed as positive for India, with the analyst highlighting that in September and October, capital flight from South Korea and Taiwan from FPI selling is more than the capital outflow from India, representing an important trend for the market. Despite the current relief rally, analysts remained cautious about the sustainability of the recovery amid ongoing market challenges.
