Markets Bounce Back From Lows — What Sparked Sensex, Nifty’s Sharp Recovery?
Dalal Street delivered a dramatic turnaround on Budget day as benchmark indices recovered sharply from deep intraday losses. After witnessing heavy selling in the first half of the session, the Sensex and Nifty bounced back strongly, signaling that investors were quick to spot value at lower levels.
The Sensex recouped nearly 1,600–1,700 points from its intraday low, while the Nifty reclaimed the psychologically crucial 25,000 mark and even moved toward 25,100 during recovery trades. This rebound came amid continued volatility following the Union Budget presentation by Finance Minister Nirmala Sitharaman.
By around 1:30 pm, the Sensex was trading at 81,591.37, down 678 points, and the Nifty stood at 25,040.60, down 280 points. Although indices remained in the red, the recovery from the lows was significant and pointed to resilient risk appetite.
Value Buying Emerges as Investors Hunt for Bargains
One of the primary drivers behind the rebound was value buying. After the sharp fall earlier in the day, several frontline stocks began trading at attractive valuations, prompting investors to step in.
Budget-day volatility often creates exaggerated price moves, and seasoned market participants tend to use such dips to accumulate quality stocks. The recovery suggested that the broader market still sees India’s long-term growth story intact despite near-term uncertainty.
Market breadth also supported the rebound narrative, with about 1,886 shares advancing versus 1,397 declining. This positive breadth indicated that buying interest was not limited to a handful of stocks but spread across segments.
Manufacturing and Growth Push in Budget Supports Sentiment
The Union Budget’s emphasis on domestic manufacturing, skilling, and job creation helped steady investor confidence. Policy support for semiconductors, rare earths, biosimilars, and clean technology reinforced the government’s future-growth narrative.
Additionally, the proposed overhaul in share buyback taxation aimed at protecting minority shareholders while curbing tax arbitrage was seen as a governance-positive move.
These structural signals reminded investors that while short-term taxes like STT can hurt sentiment, the broader policy direction remains pro-growth and reform-oriented.
Oil Supply Clarity Eases Energy Security Concerns
Global cues also played a role in the rebound. Comments from U.S. President Donald Trump suggesting India could buy Venezuelan oil instead of relying heavily on Iranian or Russian supplies brought some comfort to markets.
Any clarity on alternative crude sources reduces concerns around energy security and potential import cost spikes. For an oil-importing nation like India, stable supply expectations can support macro stability, inflation outlook, and corporate margins.
This external factor added a layer of reassurance during an otherwise volatile trading session.
FII Buying Provides Tactical Support
Foreign institutional investors (FIIs) were also part of the rebound story. Exchange data showed FIIs bought equities worth ₹2,251 crore recently, offering tactical support to the market.
However, experts remain cautious. Market strategist V. K. Vijayakumar noted that while selling intensity reduced toward month-end, FPIs were still net sellers in January, with total selling around ₹38,740 crore.
“FIIs will be looking for cues from the Budget before deciding their strategy going forward,” he said.
The moderation in selling pressure nevertheless helped sentiment stabilize.
Precious Metals Correction Diverts Attention to Equities
Another interesting trigger was the sharp correction in gold and silver prices. Precious metals futures fell up to 6 percent, and gold ETFs saw steep declines.
When safe-haven assets correct, some capital often rotates back into equities in search of higher returns.
“The sharp correction in gold and silver, if it persists, can divert investor interest from precious metals to equities,” Vijayakumar said.
This asset-allocation shift likely contributed to the equity rebound.
IT Stocks Rebound on Tax and Policy Clarity
IT stocks supported the recovery after the Budget introduced favourable tax and compliance measures for the sector. The safe harbour threshold for IT services was raised sharply, and a unified margin framework was introduced.
Automation of approvals and faster Advance Pricing Agreements reduce uncertainty for IT firms.
A long-term tax holiday for foreign cloud companies using Indian data centres also strengthens India’s digital infrastructure story. Together, these measures improved sentiment toward the IT pack, which had been under pressure in previous sessions.
Here’s What Happened Today and Why Traders Reacted
Today’s rebound was driven by a mix of:
• Value buying after sharp declines
• Positive takeaways from manufacturing and tech push
• Oil supply clarity
• Tactical FII buying
• Precious metals correction
• IT sector relief measures
Traders reacted quickly to shifting narratives, turning a panic-driven fall into a measured recovery.
Technical Outlook: Key Levels in Focus
From a technical standpoint, the Nifty held above important support zones.
Anand James, Chief Market Strategist at Geojit Investments, said:
“The 25,180 region has held ground so far, preventing a potential fall to lower zones. Expect swings within the 25,180–25,400 band. Oscillators permit further upside toward 25,580–25,800, but weak momentum raises questions on sustainability.”
This suggests the market is attempting stabilization but remains vulnerable to news flow.
What This Means for Investors
For investors, the day reinforced two lessons: volatility is inevitable on policy days, and sharp declines can create selective opportunities.
Long-term investors may focus on sectors backed by policy support such as manufacturing, defence, clean tech, and digital infrastructure. Short-term traders, meanwhile, should prepare for continued swings as markets digest Budget implications.
The strong rebound shows that underlying confidence in India’s growth story remains alive — even if the journey stays volatile.
