Sensex, Nifty settle lower but recover sharply from intraday lows; here's why

Indian equity benchmarks ended lower on Friday but recovered sharply from their intraday low levels. At close, the 30-share BSE Sensex pack fell 120.83 points or 0.16 per cent to 74,781.76, while the NSE Nifty index declined 79.70 points or 0.34 per cent to 23,398.10.

Sensex recovered 621.6 points from its intraday low of 74,160.16, while Nifty bounced back 166.7 points from a low of 23,231.40.

Among Nifty constituents, Dr Reddy's Laboratories Ltd and HDFC Bank Ltd were the top gainers, while JSW Steel Ltd and Hindalco Industries Ltd emerged as the biggest laggards.

On the sectoral front, Nifty Realty and Nifty Metal remained under pressure, while Nifty IT and Nifty Private Bank provided some support.

Why market cuts narrowed

Vinod Nair, Head of Research at Geojit Investments, stated, "The market recovered from intraday lows, aided by value buying in select sectors, particularly IT, following a positive opening in European markets."

Nair, however, added, "Despite the rebound, weak market breadth suggests broader consolidation persists. While elevated crude prices, foreign outflows, and geopolitical uncertainty may keep volatility high, resilient domestic fundamentals and strong institutional support continue to attract buying at lower levels, limiting downside risks and supporting the medium-term outlook."

Buying in banks

"The banking benchmark index also opened with a gap down. However, robust short covering triggered a recovery of nearly 890 points from the day's low. Nifty Bank formed a strong bullish candle with a lower wick on daily charts, indicating buying traction at lower levels. The index closed 0.24 per cent higher despite the gap-down opening, highlighting increased buyer participation at lower levels," said Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities.

Crude oil slips

Brent crude prices eased after nearing the $110-a-barrel mark. At last check, Brent crude futures were down 3.69 per cent at $103.66 a barrel, while US WTI crude declined 3.36 per cent to $99.04.

Nifty outlook

"Going forward, the 23,250–23,230 zone could act as a crucial support area, coinciding with today's low. A sustained breach below 23,230 could accelerate selling pressure towards 23,080 level. On the upside, 23,600–23,620 is likely to act as an immediate hurdle. A sustained move above 23,620 could extend the pullback towards 23,800 levels," SBI Securities' Shah said.