Bulls Roar Back: Sensex & Nifty Rebound Despite Wall Street Chaos – What’s Driving the Rally?

“From Panic to Power: Can Indian Markets Sustain This Momentum?”

After Monday’s market slump triggered by fears surrounding China’s DeepSeek R1 AI model, the Indian equity markets staged a stunning comeback on Tuesday. The Sensex surged 1,146.79 points, or 1.5%, to hit 76,512.96, while the Nifty jumped 308.8 points, or 1.35%, to close at 23,137.95.

This rally, despite a Wall Street rout, was driven by a combination of factors, including RBI’s liquidity infusion, a rebound in banking stocks, and the market’s oversold zone technical recovery.

“Banking Stocks: The Powerhouse Behind the Surge”

Banking and financial stocks led the recovery, boosted by the Reserve Bank of India’s liquidity-boosting measures. The Nifty Bank index rose by 2%, with private lenders like HDFC Bank, Axis Bank, and ICICI Bank emerging as top gainers.

• ICICI Bank reported a 15% year-on-year rise in PAT, reaching ₹11,792 crore, adding to investor optimism.
• Rate-sensitive stocks like LIC Housing Finance, Bajaj Finance, and Mahindra & Mahindra Financial Services gained 1.5%-4%.

Ajit Mishra of Religare Broking noted, “RBI’s liquidity infusion, combined with ICICI Bank’s strong results, created a favorable environment for financial stocks to outperform.”

Key Highlights:

• Nifty Bank Index: Up 2%.
• ICICI Bank: Profit after tax grew 15% to ₹11,792 crore.
• Rate-sensitive stocks saw significant gains.

“Global Jitters Eased: Minimal Impact of DeepSeek R1”

Global markets were rattled on Monday following the launch of China’s DeepSeek R1 AI model, raising fears of increased competition in the tech space, especially for U.S. giants like Nvidia. This triggered a 1.5% drop in the S&P 500 and a 3% fall in Nasdaq 100.

Indian markets initially followed suit, but analysts dismissed fears of a direct impact on Indian companies, allowing a rebound.

Kranthi Bathini of WealthMills Securities stated, “The DeepSeek R1 announcement may not directly impact Indian firms. Panic selling was overdone, and a recovery was inevitable.”

Key Takeaways:

• DeepSeek R1 AI fears triggered global sell-offs, but the impact on Indian stocks is minimal.
• Selective buying drove Tuesday’s recovery.

“Oversold Markets Trigger Technical Recovery”

The recent correction had pushed Indian markets into an oversold zone, making a pullback inevitable. Favorable macro conditions, such as a dip in the U.S. Dollar Index and a decline in bond yields, further supported the recovery.

Ruchit Jain of Motilal Oswal Financial Services explained, “Markets trading at long-term average valuations provide opportunities for investors to accumulate fundamentally strong stocks.”

Key Highlights:

• Technical recovery: Oversold zone prompted buying interest.
• Long-term valuations: In line with averages, encouraging investors.

Dr. V K Vijayakumar of Geojit Financial Services added, “This is an ideal phase for investors to focus on high-quality large-cap stocks.”

“What Lies Ahead: Can the Bulls Keep Roaring?”

While the rebound has sparked optimism, analysts remain cautious about near-term volatility. Anand James of Geojit Financial Services highlighted key levels: “If the indices hold above 22,800, a move toward 23,128 or 23,211 is possible. However, any sharp surge beyond this range seems unlikely.”

Investor Outlook:

• Large-cap stocks continue to outperform mid- and small-caps.
• Consolidation is expected in the immediate term.Know more about us-
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