Markets Stage Dramatic Comeback After Volatile Session: Is the Recovery Gaining Real Strength?
| Index | Price | Change | % Chg |
| Nifty 50 | 25,418.90 | 76.15 | +0.30% |
| Nifty Bank | 59,957.85 | 359.05 | +0.60% |
| Nifty Financial | 27,509.60 | 174.40 | +0.64% |
| BSE SENSEX | 82,566.37 | 221.69 | +0.27% |
Indian equity markets once again proved their resilience on January 29, extending their winning streak to the third consecutive session despite a highly volatile trading environment. The Sensex climbed 222 points to close at 82,566, while the Nifty 50 ended above the crucial 25,400 mark at 25,418, after recovering sharply from intraday lows.
The session was marked by sharp swings, nervous sentiment ahead of the Union Budget, and mixed global cues. Yet, strong buying in select heavyweight stocks, improving domestic data, and supportive institutional flows helped the benchmarks end in the green. For traders and investors, the key question now is whether this rebound reflects genuine strength or is merely a temporary relief rally.
Also Read : IT Stocks Slip Up to 3% After Two-Day Rally — What’s Driving the Fresh Selling?
Here’s What Happened Today and Why Traders Reacted
The trading day began on a soft note, with indices slipping into the red almost immediately after the opening bell. Global uncertainty, nervousness ahead of the Budget and weakness in the rupee created an atmosphere of caution. By midday, the Sensex had slipped sharply, only to stage a strong recovery in the latter half of the session, gaining nearly 950 points from the day’s low.
Three powerful factors helped shift sentiment decisively:
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Monthly Sensex F&O expiry, which typically triggers volatility, short covering and positional adjustments
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FIIs turning net buyers after 15 consecutive sessions of selling, with net buying of Rs 480 crore in the cash market
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Strong DII support, with domestic institutions investing Rs 3,360 crore, providing stability during intraday weakness
Shrikant Chouhan of Kotak Securities summed up the trading setup:
“For day traders, 25,200 on Nifty and 82,000 on Sensex act as key support zones. Above these levels, the pullback rally could extend towards 25,500–25,575.”
This mix of technical factors, institutional activity and short-covering explains why traders suddenly became aggressive buyers during the latter half of the session.
Sensex, Nifty and Bank Nifty Hold Gains Despite Morning Weakness
Despite spending much of the morning under pressure, benchmarks managed to close firmly in positive territory:
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Nifty 50: 25,418.90, up 0.30%
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Sensex: 82,566.37, up 0.27%
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Bank Nifty: 59,957.85, up 0.60%
The ability of markets to recover from sharp intraday lows suggests that buyers are still active at lower levels, even though conviction remains selective rather than broad-based. Banking stocks played a key role in stabilising sentiment, while metals and energy stocks provided additional support.
This pattern indicates that while investors are cautious, they are not abandoning the market. Instead, they are selectively deploying capital into sectors perceived to offer better risk-reward in the current environment.
Economic Survey and Strong IIP Data Strengthen the Fundamental Backdrop
Beyond technical and liquidity-driven factors, macroeconomic data also played a supportive role. The Economic Survey projected FY27 GDP growth at 6.8–7.2%, reinforcing confidence in India’s medium-term growth outlook. This projection, coming just days before the Union Budget, reassured investors that the broader economic narrative remains intact.
Adding further strength was the latest Index of Industrial Production (IIP) data, which showed a robust 7.8% growth in December 2025, the fastest pace in over two years. Manufacturing output expanded by 8.1% year-on-year, while mining activity also recorded healthy growth.
For investors, this data sends a strong signal:
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Economic momentum remains resilient
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Corporate earnings risks may be limited
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Cyclical sectors like metals, banks, infra, power and capital goods may continue to find support
These indicators provide a fundamental cushion beneath the market, even as short-term volatility persists.
Sectoral Performance Reveals Rotational Buying Rather Than Broad Conviction
A closer look at sectoral performance shows that the market’s strength is not evenly distributed. Instead, it reflects rotational buying, where money is moving into selective sectors while exiting others.
Top gaining sectors:
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Metal (+3.07%)
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Oil & Gas (+0.78%)
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Realty (+0.67%)
Top losing sectors:
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FMCG (-0.91%)
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Pharma (-0.81%)
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IT (-0.76%)
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Auto (-0.68%)
Metal stocks clearly dominated, supported by rising global commodity prices and expectations of stronger demand from infrastructure and manufacturing. Meanwhile, defensive sectors such as FMCG and pharma witnessed profit booking, indicating a subtle shift toward risk-taking — but only in selected pockets.
This kind of market behaviour typically suggests cautious optimism rather than aggressive bullishness.
Top Gainers and Losers Highlight Where Institutional Money Is Flowing
Stock-level performance provided even clearer insight into investor preference.
Top gainers:
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Tata Steel (+4.49%)
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L&T (+3.80%)
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Axis Bank (+3.42%)
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NTPC (+3.00%)
Top losers:
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Asian Paints (-3.85%)
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Indigo (-2.71%)
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SBI Life (-2.69%)
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Maruti (-2.64%)
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Tata Consumer (-2.54%)
The leadership of L&T, Axis Bank and Tata Steel reflects growing interest in capex-driven, cyclical and value-oriented stocks, while the weakness in Asian Paints, Maruti and consumer stocks suggests continued caution around discretionary demand.
Rupee Hits Record Low Near 92, Adding Another Layer of Market Uncertainty
Currency markets added to the complexity of the session. The rupee weakened to a record low of 91.985 per dollar intraday, before closing slightly stronger at 91.955, down 0.2% for the day. Corporate hedging demand and non-deliverable forward maturities pressured the currency, although RBI intervention likely prevented a sharp breach of the 92 level.
A weak rupee creates mixed implications:
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Exporters like IT and pharma may benefit
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Import-heavy sectors face cost pressures
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Bond markets remain cautious
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Inflation concerns can re-emerge
This currency volatility ensured that investors remained cautious even as equities recovered.
Global Cues and Geopolitics Continue to Keep Volatility Elevated
Global markets provided no clear direction. Asian markets were mixed, with Japan and Australia declining while Hong Kong traded positive. Indonesian markets witnessed sharp losses, raising concerns about broader emerging market risk sentiment.
At the same time, elevated gold, silver and crude prices — driven by US–Iran geopolitical tensions — added to the risk backdrop. These global factors prevented domestic markets from turning euphoric, keeping the rebound controlled rather than explosive.
Technical Indicators Suggest Cautious Optimism With Resistance Ahead
From a technical perspective, Nifty managed to stay above key short-term averages but continues to face resistance near higher levels. Analysts noted that the index is hovering near its 200 DEMA, indicating indecision and lack of strong trend confirmation.
FundsIndia Equity Research observed:
“The index formed a bullish candlestick on the daily chart, but selling pressure is expected at higher levels. A sustained bullish reversal only emerges above 25,500.”
Key levels traders are tracking:
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Resistance: 25,500–25,600
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Support: 25,200 followed by 25,000
This setup suggests traders should remain tactical rather than aggressively directional.
What This Means for Short-Term Traders
For traders, the environment remains rich in opportunity but equally high in risk. Event-driven volatility due to the Union Budget, global headlines and institutional flows means that sharp intraday swings may continue.
Traders are currently focusing on:
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Momentum in metals and select banking stocks
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Technical levels around 25,200–25,500
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Strict risk management and smaller position sizes
With multiple triggers lined up, agility matters more than conviction in the near term.
What This Means for Long-Term Investors and Portfolios
For long-term investors, the broader message from the market remains constructive. Despite volatility, key supports continue to hold, backed by:
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Strong domestic economic data
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Positive Economic Survey outlook
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Persistent DII buying
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Renewed FII participation
This supports a disciplined strategy of:
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Staying invested rather than timing the market
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Accumulating high-quality stocks during corrections
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Focusing on sectors with long-term tailwinds such as banking, infrastructure, power and manufacturing
However, diversification remains essential as uncertainty around the Budget and global developments still lingers.
FAQs Markets Recovered From Lows Today
Q. Why did the Sensex recover nearly 950 points from the day’s low despite weak global cues?
The recovery was driven by late-session buying from domestic institutional investors (DIIs), short covering during Sensex F&O expiry, and renewed foreign investor inflows. Positive domestic cues such as strong IIP data and optimism around the Economic Survey also helped reverse sentiment in the second half of trade.
Q. How does the Union Budget uncertainty impact short-term traders in the Indian stock market?
Ahead of the Budget, traders often reduce overnight positions due to headline risk, leading to higher intraday volatility. This results in range-bound trading, frequent stop-loss triggers, and increased focus on technical levels rather than fundamentals.
Q. Why are metal stocks outperforming when FMCG and IT stocks are under pressure?
Metal stocks are benefiting from rising global commodity prices, strong infrastructure spending expectations, and cyclical optimism. FMCG and IT, on the other hand, are facing profit booking due to valuation concerns and global uncertainty around demand and currency movement.
Q. What does Nifty trading near the 200 DEMA indicate for positional investors?
When Nifty trades around the 200 DEMA, it usually signals indecision in the market. For positional investors, this zone often acts as a “make-or-break” level, where sustained buying above resistance can confirm an uptrend, while rejection can lead to another corrective phase.
Q. How does FII buying after a long selling streak impact market sentiment?
When foreign institutional investors turn buyers after extended selling, it often improves short-term confidence and can trigger short-covering rallies. However, sustained upside requires consistency in flows rather than one-day buying.
Q. What impact does a weakening rupee near 92 per dollar have on investor portfolios?
A weak rupee benefits export-heavy sectors like IT and pharma but can hurt companies dependent on imports such as oil marketing firms. For investors, it increases the importance of sector diversification and hedging through global or gold-linked assets.
Q. Why are DIIs becoming more influential than FIIs in driving Indian market direction?
With rising SIP flows, insurance investments, and retirement savings, DIIs now provide a strong liquidity cushion. Even when FIIs sell aggressively, consistent DII buying often prevents deep market crashes, making domestic flows a key structural support for Indian equities.
