With a remarkable comeback, benchmark indices Sensex and Nifty ended nearly flat after sharp intraday losses in early trading on Monday.
In what can be described as an extremely volatile trade, the 30-share BSE Sensex increased by 77.05 points, or 0.10 per cent, to settle at 75,315.04. During the day, it tumbled 1,134.78 points, or 1.50 per cent, to 74,180.26. The 50-share NSE Nifty edged higher by 6.45 points, or 0.03 per cent, to end at 23,649.95.
Sensex recovered over 1,100 points from the day’s low to close at 75,315, while the NSE Nifty 50 edged slightly higher to finish near 23,650. The rebound was witnessed after markets initially plunged more than 1 per cent amid global uncertainty and domestic macroeconomic concerns.
What caused the stock market to fall during the early trading session?
Investors were seen reacting to a combination of uncertainties that included the West Asia conflict, surging crude oil prices, and a weakening Indian rupee.
"Global risk appetite weakened sharply after fresh escalation fears emerged in the Middle East. US President Donald Trump's warning urging Iran to 'get moving, FAST' has once again revived concerns around a possible disruption in global crude oil supply routes, particularly around the Strait of Hormuz," Hariprasad K, Research Analyst and Founder, Livelong Wealth, said to PTI.
What caused the markets to rebound?
The saving grace was witnessed in the value buying of IT stocks. From the Sensex firms, Tech Mahindra, Infosys, Bharti Airtel, Bajaj Finserv, Sun Pharma, HCL Tech, Bajaj Finance and Tata Consultancy Services were among the major winners.
"The prolonged stalemate between the US and Iran continues to cast a shadow over near-term sentiment, yet the equity market managed to recover intraday losses and closed on a flat note, supported by value buying in IT and banking stocks. The ongoing earnings season has provided a constructive narrative, but caution persists as higher bond yields, elevated crude oil prices, and a weakening rupee reinforce inflationary concerns," Vinod Nair, Head of Research, Geojit Investments Limited, said to PTI.
Market analysts observed that investors grabbed the opportunity to shift from panic-driven selling towards selective value buying and aggressive short covering, helping the equity markets stage a strong intraday recovery after witnessing weakness during the opening phase.