Sensex rebounds from intraday low, settles 271 points lower; Nifty holds 25,150: Here's why the market recovered
The broader market (mid-cap and small-cap indices) remained under pressure, trading in the red and shedding around 1 per cent each.
- Jan 21, 2026,
- Updated Jan 21, 2026 3:40 PM IST
Indian equity benchmarks rebounded in Wednesday's volatile session, staging a sharp recovery from the intraday lows but eventually ending lower. Extending losses for a third consecutive day, the BSE Sensex pack slipped 270.84 points or 0.33 per cent to close at 81,909.63, while the NSE Nifty index declined 75 points or 0.30 per cent to settle at 25,157.50. In the process, Sensex bounced back 785.18 points from its day's low of 81,124.45, while the Nifty recovered 237.7 points from an intraday low of 24,919.80.
"Overall, the market is in a downtrend. But Nifty is steadily holding 25,000 level. Geopolitical tensions have been creating pressure on the indices for the medium- to short-term. Continuous selling by foreign portfolio investors is the key reason behind the recent fall. Also, earnings season is not able to entice investors," said Kranthi Bathini, Director – Equity Strategy at WealthMills Securities.
Bathini said the mentioned rebound in domestic equities was supported by the European Union's landmark trade agreement with India, along with expectations surrounding the upcoming Union Budget 2026. "Also, the market seems oversold," Bathini added.
The market managed to recover a part of the losses, helped by buying at lower levels, noted Ravi Singh, Chief Research Officer at Mastertrust. "This shows that while sentiment is fragile, there is still demand from investors willing to step in on sharp declines. Today's move looks more like volatility and risk-off selling, not a panic or crash. Markets may remain choppy in the near term, with stock-specific action and global cues continuing to drive direction," Singh also said.
That said, the broader market (mid-cap and small-cap indices) remained under pressure, trading in the red and shedding around 1 per cent each.
Corrections in the small- and mid-cap segment have historically created opportunities for long-term investors, said G Chokkalingam, Managing Director – Research at Equinomics.
"History amply proves that meltdown in the small & mid cap (SMC) segment is always an opportunity for the medium to long-term. Huge retail investor base, historical experience of solid wealth creation, huge number of unique business models available always favoured small caps in terms of wealth creation in the long-term," he stated.
Chokkalingam cautioned that stock selection remains critical, noting that "small cap is also in the forefront in terms of wealth destructions, if stock selections are not based on quality of management, quality & durability of business models and valuation comfort zone."
He added that while global factors have played a role, domestic liquidity dynamics have also contributed to the sell-off. "It is true that US tariff war against India and global political tensions have caused, to a significant extent, the current meltdown in the markets. However, it is liquidity constraint, caused by drain out of liquidity through promoter selling & IPO boom were the major reasons for steep erosions in SMC pack," Chokkalingam further said.
Indian equity benchmarks rebounded in Wednesday's volatile session, staging a sharp recovery from the intraday lows but eventually ending lower. Extending losses for a third consecutive day, the BSE Sensex pack slipped 270.84 points or 0.33 per cent to close at 81,909.63, while the NSE Nifty index declined 75 points or 0.30 per cent to settle at 25,157.50. In the process, Sensex bounced back 785.18 points from its day's low of 81,124.45, while the Nifty recovered 237.7 points from an intraday low of 24,919.80.
"Overall, the market is in a downtrend. But Nifty is steadily holding 25,000 level. Geopolitical tensions have been creating pressure on the indices for the medium- to short-term. Continuous selling by foreign portfolio investors is the key reason behind the recent fall. Also, earnings season is not able to entice investors," said Kranthi Bathini, Director – Equity Strategy at WealthMills Securities.
Bathini said the mentioned rebound in domestic equities was supported by the European Union's landmark trade agreement with India, along with expectations surrounding the upcoming Union Budget 2026. "Also, the market seems oversold," Bathini added.
The market managed to recover a part of the losses, helped by buying at lower levels, noted Ravi Singh, Chief Research Officer at Mastertrust. "This shows that while sentiment is fragile, there is still demand from investors willing to step in on sharp declines. Today's move looks more like volatility and risk-off selling, not a panic or crash. Markets may remain choppy in the near term, with stock-specific action and global cues continuing to drive direction," Singh also said.
That said, the broader market (mid-cap and small-cap indices) remained under pressure, trading in the red and shedding around 1 per cent each.
Corrections in the small- and mid-cap segment have historically created opportunities for long-term investors, said G Chokkalingam, Managing Director – Research at Equinomics.
"History amply proves that meltdown in the small & mid cap (SMC) segment is always an opportunity for the medium to long-term. Huge retail investor base, historical experience of solid wealth creation, huge number of unique business models available always favoured small caps in terms of wealth creation in the long-term," he stated.
Chokkalingam cautioned that stock selection remains critical, noting that "small cap is also in the forefront in terms of wealth destructions, if stock selections are not based on quality of management, quality & durability of business models and valuation comfort zone."
He added that while global factors have played a role, domestic liquidity dynamics have also contributed to the sell-off. "It is true that US tariff war against India and global political tensions have caused, to a significant extent, the current meltdown in the markets. However, it is liquidity constraint, caused by drain out of liquidity through promoter selling & IPO boom were the major reasons for steep erosions in SMC pack," Chokkalingam further said.