Financials and Energy Stocks Power a Sensex and Nifty bounce—Are Investors Turning Optimistic Again?

Indian equity markets delivered a strong comeback on Monday, snapping a recent losing streak as investors rushed to pick up beaten-down stocks across sectors. The rebound was broad-based but led by financials, energy, pharma and FMCG names, which helped benchmark indices recover from early losses and close near the day’s highs.

The BSE Sensex climbed 650.39 points or 0.79% to settle at 83,277.15, while the Nifty 50 rose 211.65 points or 0.83% to end at 25,682.75, reclaiming the crucial 25,650 level. The move marked the end of a two-session slide for the Nifty and a three-day decline for the Sensex.

The rally came after Friday’s sharp fall, when the Sensex had tumbled over 1,048 points and the Nifty had dropped 336 points, creating attractive entry points for value-focused investors.

Also Read : IT Stocks Stage A Surprise Comeback After AI Jitters — But Are Investors Out Of The Woods Yet?

Markets Script A Smart Rebound As Investors Hunt For Value After Recent Selloff

Monday’s session illustrated how quickly sentiment can shift on Dalal Street when valuations become appealing. After last week’s correction, many large-cap stocks were trading below recent averages, prompting institutional and retail investors to selectively re-enter. Dealers said that long-only funds and domestic institutions were seen adding positions in quality names, especially where earnings visibility remained stable.

The rebound also suggested that the recent decline had more to do with short-term profit booking and global uncertainty than any deterioration in domestic fundamentals. While traders remained mindful of global risks, the willingness to buy into weakness indicated that confidence in India’s medium-term growth story remains intact. The recovery into the close, with indices finishing near the day’s highs, added to the perception that buyers were in control by the end of the session.

Here’s What Happened Today And Why Traders Reacted

The day began on a weak footing, with the Nifty slipping below 25,400 and the Sensex dropping over 349 points in early trade amid mixed global cues. However, the early dip quickly attracted buyers who viewed the fall as an opportunity rather than a warning sign. As buying interest picked up in financials, energy and defensives, indices pared losses and gradually moved into positive territory.

Traders reacted to several factors:

• Attractive valuations after Friday’s sharp fall

• Buying in banking and energy heavyweights

• Strength in realty, pharma and FMCG

• Stable, though mixed, global cues

• Selective institutional accumulation

The steady climb through the day, despite intermittent volatility, suggested that the recovery was not merely a short-covering bounce but had elements of genuine demand. By the close, the market had absorbed early nervousness and shifted to a more positive stance.

Value Buying In Realty, Pharma And FMCG Lifts Sentiment

Sectoral performance showed that the rally was supported by rotation into relatively defensive and rate-sensitive pockets.  One of the key pillars of the rally was strong value buying in defensives and rate-sensitive sectors. Realty stocks rose 1.59%, pharma gained 0.94%, oil & gas added 0.90%, FMCG climbed 0.82%, and metals were up 0.69%.

Power, PSU banks, private banks, infra, capital goods and energy indices advanced 1–2%, showing that the buying was not limited to a few counters but spread across segments.

On the flip side, media fell 0.87% and auto declined 0.73%, making them the only notable laggards.

Market participants said the rally was less about euphoria and more about recalibrating valuations after the recent correction.

Banking Stocks Provide The Backbone Of The Rally

Banking stocks were central to the day’s gains, with Bank Nifty rising 1.27% to close at 60,949.10 after two sessions of decline. The recovery in banks helped anchor the broader market because of their heavy weight in indices. Traders said private banks in particular drew buying interest as their valuations had moderated while credit growth expectations remained supportive.

HDFC Bank emerged as a key driver, rising up to 3% and trading around ₹927.95 during the session. Canara Bank advanced 1.95%, Axis Bank gained 1.65%, and other lenders such as Bank of Baroda, Punjab National Bank and Kotak Mahindra Bank also ended higher. The strength in banking stocks signalled that investors were comfortable returning to cyclical and rate-sensitive sectors, at least selectively.

Key movers included:

• HDFC Bank, which rose up to 3% and traded around ₹927.95

• Canara Bank, up 1.95%

• Axis Bank, up 1.65%

• Gains in Bank of Baroda, PNB and Kotak Mahindra Bank

Traders said private banks attracted fresh buying as valuations turned reasonable and credit growth expectations remained intact.

Top Gainers And Losers Highlight Stock-Specific Moves

Among Nifty constituents, the top gainers were Power Grid, Coal India, HDFC Bank, Adani Enterprises and Max Healthcare, each benefiting from sectoral or stock-specific interest. Power Grid and Coal India rose on expectations of steady demand and stable cash flows, while healthcare names gained on defensive appeal.

Among Nifty stocks, the biggest gainers were:

• Power Grid (+4.74%)

• Coal India (+3.26%)

• HDFC Bank (+2.39%)

• Adani Enterprises (+2.09%)

• Max Healthcare (+2.03%)

Major losers included:

• KWIL (-2.01%)

• Tech Mahindra (-1.34%)

• Bajaj Finance (-1.15%)

• Maruti (-1.14%)

• Tata Motors PV (-0.91%)

Weakness in select auto and IT names capped broader upside.

Earnings-Driven Stock Action Keeps Traders Engaged

Corporate results continued to drive sharp moves in individual stocks. Ola Electric fell nearly 7% despite narrower Q3 losses, as investors focused on profitability timelines. Shakti Pumps plunged 11% after a steep profit drop. In contrast, Natco Pharma gained strongly on regulatory approval for Semaglutide, while Precision Wires jumped 15% after a 98% profit surge.

Torrent Pharma, Azad Engineering, Easy Trip Planners and GMR Airports also saw notable moves on earnings and corporate developments. Such stock-specific action highlighted how earnings season is shaping trading strategies, with investors rewarding strong numbers and punishing disappointments.

Rupee Stability And Global Cues Provide A Neutral Backdrop

The rupee closed flat at 90.66 against the US dollar, moving in a narrow range between 90.61 and 90.72. Forex traders said lower crude prices offered support, while foreign fund outflows and a firm dollar capped gains. Currency stability helped avoid additional pressure on equities, even if it did not actively drive the rally.

Global cues were mixed, with S&P 500 futures modestly higher but Asian indices largely flat. China and South Korea were closed for Lunar New Year, limiting regional signals. The absence of strong global triggers meant domestic factors played a larger role in shaping market direction.

Forex traders said:

• Lower crude prices supported the rupee

• Foreign fund outflows capped gains

• A stronger dollar overseas limited upside

The currency’s stability provided some comfort to equity investors.

Market Breadth And Volatility Paint A Mixed Picture

Despite the rally, market breadth remained mixed:

• Advancers: 1,342

• Decliners: 1,826

• 52-week highs: 51

• 52-week lows: 148

India VIX edged up 0.28% to 13.33, indicating mild caution among traders.

This suggests that while benchmarks rallied, underlying participation was selective.

Global Cues Offer Limited Direction

Global signals were mixed:

• S&P 500 futures up 0.2%

• Nasdaq futures little changed

• MSCI Asia Pacific flat

• Hang Seng up 0.4%

• Nikkei flat

• China and South Korea shut for Lunar New Year

Global markets neither strongly supported nor hindered Indian equities.

Legal Clarity On NSE IPO Adds To Sentiment

The Delhi High Court dismissed a plea against SEBI’s NOC for the NSE IPO, saying the petition aimed to “interdict” the listing. The decision clears a legal hurdle in NSE’s long-awaited listing process and was seen as sentiment-positive for capital markets.

What Impacted Investor Portfolios And What Comes Next

For investors, the rebound helped offset part of last week’s losses, particularly for those with exposure to banks, energy and defensives. Portfolios tilted toward auto or IT may have seen less benefit. The session underscored the importance of diversification and staggered buying during volatile phases.

Going ahead, traders will watch whether Nifty can hold above 25,650 and whether value buying continues. Global rate expectations, FII flows and earnings updates remain key triggers. For now, Monday’s move suggests that dips are attracting buyers, but conviction remains selective rather than exuberant.

What Could Impact Markets Next

Traders are watching:

• Sustainability of value buying

• Global rate outlook

• FII flow trends

• Earnings momentum

• Nifty’s ability to hold above 25,650

Some analysts noted that failure to sustain above 25,530 earlier signalled weakness, but Monday’s close above that level improves near-term sentiment.

What This Means For Investors Going Forward

Monday’s rally signals that markets still have underlying strength when valuations turn attractive. However, selective participation and rising volatility suggest investors should remain disciplined.

For now, the message from Dalal Street is clear: dips are being bought, but conviction remains cautious. The coming sessions will reveal whether this rebound evolves into a sustained uptrend or remains a tactical bounce.

• Nifty 50
• Bank Nifty
• Sensex

FAQs Sensex and Nifty bounce

Q) Why did the Sensex and Nifty rebound sharply even though global markets were mixed?

Indian markets rebounded mainly due to domestic value buying after last week’s correction, where several large-cap stocks became attractive at lower valuations. Even though global cues were mixed, investors focused more on local factors such as strong banking stocks, defensive sector buying, and selective accumulation in fundamentally strong companies.

Q) How does value buying in sectors like pharma and FMCG signal market confidence?

Value buying in pharma and FMCG usually indicates that investors are seeking earnings stability and predictable cash flows. These sectors are considered defensive, so increased interest often reflects cautious optimism — investors are willing to deploy capital but still prefer lower-risk segments.

Q) What does Bank Nifty’s recovery after two losing sessions mean for the broader market trend?

Bank Nifty has a heavy weight in benchmark indices, so its recovery often supports the overall market. When major banks like HDFC Bank and Axis Bank rise, it signals confidence in credit growth and economic activity, which can help sustain a broader market uptrend if momentum continues.

Q) Should retail investors chase rallies driven by value buying?

Chasing rallies can be risky. Value-buying rallies often start as selective moves and may not lift all stocks equally. Retail investors typically benefit more from staggered investments and focusing on companies with strong earnings visibility rather than reacting to one-day rebounds.

Q) How do rupee movements impact equity markets on days like today?

A stable rupee reduces uncertainty for foreign investors and import-dependent sectors. While today’s rally was not currency-driven, a sharp rupee fall could have capped gains. Currency stability generally helps maintain investor confidence, especially among FIIs.

Q) Why was market breadth weaker even though indices rose strongly?

When indices rise but breadth is weak, it usually means gains are concentrated in heavyweight stocks rather than broad-based. This suggests institutional buying in select names rather than widespread optimism, and traders often watch breadth to judge rally strength.

Q) What signals should investors watch to confirm whether this rebound can continue?

Investors typically track:

• Sustained FII inflows

• Earnings upgrades from major companies

• Nifty holding above key support levels

• Broader market participation

• Global rate outlook and oil prices