Closing Bell: Sensex recovers over 550 points from day's low; Nifty ends above 23,400 — Why did markets recover?

Stock Market Closing Bell: Domestic equity benchmarks staged a sharp recovery on Thursday after opening lower amid continued foreign institutional investor (FII) selling pressure. Buying in the broader market and optimism over possible tax relief for foreign investors helped the indices erase early losses and end almost flat.

The BSE Sensex opened 410.34 points lower at 73,935.83 against its previous close of 74,346.17. The 30-share index slipped further to an intraday low of 73,807.30, down 538.87 points from the previous close.

However, the benchmark witnessed strong buying in the second half of the session and recovered 552.71 points from the day's low to settle at 74,360.01, up 13.84 points or 0.02 per cent.

The NSE Nifty 50 also followed a similar trend. It opened 123.15 points lower at 23,282.45 and touched a low of 23,247.30, down 158.30 points from the previous close of 23,405.60. The index later rebounded 169.25 points from the day's low to end at 23,416.55, gaining 10.95 points or 0.05 per cent.

Broader market outperforms benchmark indices

Market breadth remained positive throughout the session, with broader indices outperforming the frontline benchmarks.

The Nifty Midcap 100 advanced 0.46 per cent, while the Nifty Smallcap 100 gained 0.49 per cent. The Nifty Microcap 250 emerged as one of the strongest performers, rising 0.86 per cent.

Among sectoral indices, Nifty Media jumped 2.19 per cent, and Nifty Consumer Durables climbed 2.18 per cent. Nifty PSU Bank, Pharma and Financial Services indices also closed in positive territory.

On the other hand, weakness persisted in select sectors. Nifty Metal declined 0.73 per cent, while Nifty IT slipped 0.29 per cent.

Among Sensex constituents, Titan, Eternal and ITC were the top gainers. Tech Mahindra, State Bank of India and ICICI Bank also ended with gains. Infosys emerged as the biggest laggard, followed by Bajaj Finserv and UltraTech Cement.

FII selling and tax relief hopes keep market range-bound

According to Zee Business Managing Editor Anil Singhvi, the domestic market is currently balancing between continued FII selling and expectations of possible tax relief for overseas investors.

Singhvi described the present market situation as a "sandwich", where selling by foreign investors is capping gains while hopes of lower taxation for FPIs are providing support at lower levels.

He said the market recovered after a weak start as investors drew confidence from expectations that the government could announce measures to ease the tax burden on foreign investors.

However, he added that the ongoing selling by FIIs is preventing a decisive upside move in benchmark indices.

Broader market strength lifts sentiment

Singhvi said the resilience shown by midcap and smallcap stocks has played an important role in improving overall market sentiment. According to him, the broader market has remained firm despite weakness in some global markets, indicating that domestic investors continue to participate actively in equities.

He also pointed to a recovery in US futures during the trading session and stable crude oil prices as factors that supported the market rebound.

Singhvi said the absence of any major negative trigger from global commodity markets helped investors focus on domestic positives.

Key levels to watch for Nifty and Bank Nifty

On the technical outlook, Singhvi said the 23,150-23,250 zone remains an important support range for the Nifty and could offer fresh buying opportunities if the index revisits those levels. He added that a close above 23,550 would strengthen bullish momentum and could pave the way for further gains.

For Bank Nifty, Singhvi said the index could move higher if it crosses its immediate resistance zone. He advised investors to closely monitor FII activity and key global developments, as these factors are likely to determine the market's near-term direction.

He also said that if the broader market continues to outperform and benchmark indices witness a clear breakout, midcap and smallcap stocks could lead the next phase of the rally.