Sensex jumps over 1,250 points from day's low; Nifty tops 25,300: Here's why the market recovered

Indian equity benchmarks staged a sharp rebound and turned positive in Wednesday's volatile session, recovering sharply from the day's low level. The benchmark BSE Sensex surged more than 1,250 points from the day's low, while the broader NSE Nifty touched the 25,300 mark.

"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 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.

However, the broader market (mid-cap and small-cap indices) remained under pressure, trading in the red and shedding over 0.50 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.