Why Nifty, Sensex Rebounded After 3-Day Fall | Explained

Benchmark Indian indices rebounded slightly on Thursday after three sessions of sell-off, as investor risk appetite improved. Though traders remain cautious, Wall Street ended in the green after comments by US President Donald Trump, which also lifted Asian markets.

The benchmark indices — Nifty 50 and BSE Sensex — were up 0.6% and 0.5% respectively in early trade. In the previous three sessions, both indices had fallen nearly 4% each, amid escalating geopolitical tensions in West Asia.

“There was a wave of selling, and as things evolve markets are betting on a better situation,” said Amit Khurana, Head of Institutional Equities at Dolat Capital. “The broader sense is that we are at the bottom of range for India. Better macro indicators and earnings are likely to reverse the selling.”

However, he added that rising crude oil prices, raw material costs, and inflation remain key downside risks.

Among sectoral movers, Adani Ports, Reliance Industries, Bajaj Finance and L&T were among the top gainers, rising around 1–2% each. On the other hand, IndiGo, ICICI Bank, Hindustan Unilever and TCS were among the top losers.

According to Khurana, the Nifty 50 could rise to 25,200 in a best-case scenario, while an escalation in geopolitical tensions could drag it down to 22,300.

Several factors helped improve investor sentiment:

1. Reports of De-escalation

Reports indicate a potential de-escalation in West Asia following comments from Trump about the US escorting ships through the Strait of Hormuz and providing insurance support for shipping companies.

Iran’s earlier announcement about shutting down the Strait of Hormuz had triggered panic across global markets, raising fears of supply chain disruptions and crude shortages.

Meanwhile, a New York Times report suggested that Tehran’s intelligence operatives indirectly contacted the CIA for talks after a US submarine sank an Iranian warship, though official confirmation is awaited.

2. Improved Global Risk Appetite

Hopes of a quicker-than-expected de-escalation improved global risk sentiment.

Among Asian markets, South Korea’s Kospi rose 9% after falling 12% in the previous session. Japan’s Nikkei gained around 2%, while Hong Kong’s Hang Seng and China’s Shanghai Composite rose about 1% each.

Asian markets tracked gains on Wall Street, where the Nasdaq and S&P 500 each rose about 1%.

3. Better Oil Outlook

Despite concerns over a possible closure of the Strait of Hormuz, assurances from the US administration helped ease market jitters.

Trump ordered the US International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf. He also said the US Navy could escort oil tankers through the Strait if required.

4. Oil Stocks Gain

Oil and energy stocks advanced as investors bought shares of Reliance Industries and upstream companies such as ONGC and Oil India, pushing the oil and gas index nearly 2% higher.

5. India VIX Declines

The India Volatility Index (VIX), the market’s preferred gauge of volatility, fell around 10% to 19.04. A decline in the index typically indicates improving investor sentiment and a calmer market outlook.

6. Rupee Pairs Some Losses

After breaching the psychologically important level of ₹92 per dollar, the rupee recovered partially to ₹91.57 per dollar, rising 48 paise on Thursday.

According to a Reuters report, the Reserve Bank of India intervened heavily in the non-deliverable forwards (NDF) market before the domestic spot market opened. The central bank reportedly sold dollars via state-run banks to support the rupee amid pressure from rising oil prices.

Markets, however, are likely to remain volatile as investors continue to track developments in West Asia and movements in global oil prices. Analysts say investors remain particularly cautious about the evolving situation, with “overnight news flows and tweets keeping them on edge.”