Sensex Recovers 900 Points From Day's Low; Banking Stocks Lead Comeback

Indian benchmark indices staged a sharp recovery from their intraday lows on Wednesday as investors resorted to value buying in beaten-down stocks, helping the market erase a significant portion of its early losses despite persistent concerns over geopolitical tensions and rising crude oil prices.

The BSE Sensex, which had plunged 1,157.24 points or 1.49% to an intraday low of 73,492.60, recovered more than 850 points before closing 303.67 points or 0.41% lower at 74,346.17. Similarly, the NSE Nifty, which slipped as much as 332.05 points to 23,151.50 during the session, pared most of its losses to settle at 23,405.60, down 77.95 points or 0.33%.

The recovery came after investors stepped in to accumulate stocks at lower levels following the sharp morning selloff. The Sensex recouped more than 900 points from the day's low, while the Nifty climbed over 250 points from its intraday trough, signalling that buying interest remains intact despite the challenging macroeconomic environment.

Banking Stocks Lead Recovery

Banking shares emerged as the biggest support for the market recovery. The Nifty Bank index gained 471 points to close at 54,186, extending its winning streak to a second consecutive session.

PSU banks outperformed the broader market, with Indian Bank rising nearly 3%, helping the Nifty PSU Bank index emerge as the best-performing sector of the day. Market participants continued to favour public sector lenders amid expectations of stronger credit growth and attractive valuations.

Vinod Nair, Head of Research at Geojit Investments, said the recovery was largely driven by banking stocks.

"Domestic markets witnessed a swift recovery from initial losses despite escalating Iran-US tensions. The rebound was primarily driven by a sharp recovery in banking stocks, while IT stocks emerged as the biggest laggards due to profit booking and persistent global uncertainties," he said.

Nair added that expectations of supportive policy measures to attract foreign investments also aided sentiment, although investors remained cautious ahead of the RBI policy decision and GDP data release.

IT Stocks Remain Under Pressure

While banking stocks supported the market, information technology shares continued to witness selling pressure.

The Nifty IT index snapped its three-day winning streak, with all constituent stocks ending in the red. The weakness followed a broader correction in global software stocks and continued concerns over earnings growth amid global economic uncertainty.

The decline in technology shares offset gains seen in several domestic-facing sectors and prevented benchmark indices from returning to positive territory.

Stock-Specific Action

Several stocks witnessed sharp moves based on company-specific developments.

NHPC gained nearly 5% after its offer-for-sale was fully subscribed, while Oil India and ONGC advanced as Brent crude prices approached the $99 per barrel mark.

Borosil Renewables surged more than 8% after the government extended countervailing duties on imported solar glass, a move expected to benefit domestic manufacturers.

CarTrade Tech rallied 10% after receiving a brokerage upgrade, while IndiGo recovered from intraday lows following the Cabinet's approval of a ₹10,000 crore Aviation Turbine Fuel Stabilisation Fund.

Volatility Eases, But Caution Remains

Another factor supporting the market recovery was easing volatility. The India VIX, often referred to as the market's fear gauge, had surged nearly 10% earlier in the day to approach the 17 level. However, it later moderated and was trading around 16.28, reducing concerns of panic selling.

According to Rupak De, Senior Technical Analyst at LKP Securities, the market's recovery improved momentum indicators but did not completely change the short-term technical outlook.

"The index recovered smartly during the day but failed to reclaim the 20 EMA on the hourly chart, keeping the possibility of another decline alive. A lower-top, lower-bottom formation is visible on the hourly timeframe, indicating a bearish trend in the recent price structure," he said.

De noted that while positive divergence on the hourly RSI indicates some improvement in momentum, the Nifty could test the 23,000 level if it falls below 23,300. On the upside, 23,600 remains a key resistance level.

Focus Shifts To RBI Policy

Investors are now expected to closely track the Reserve Bank of India's policy decision and GDP data, both of which could provide important clues about the economy's growth trajectory and inflation outlook.

Nair said markets remain sensitive to geopolitical developments, inflation risks arising from elevated crude oil prices and progress in US-India trade negotiations. While value buying helped arrest Wednesday's decline, traders are likely to remain cautious until greater clarity emerges on these key domestic and global triggers.