Indian equity benchmarks experienced a volatile trading session on Wednesday, with the BSE Sensex and the NSE Nifty 50 rebounding strongly in the latter half of the day after an early dip into negative territory. Driven by significant gains in the information technology (IT) and private banking sectors, the indices ended with notable gains, reflecting a mix of investor optimism and global cues.
Market Overview: Sensex and Nifty Recover After Early Slump
The benchmark BSE Sensex opened the day on a positive note at 76,114, reflecting a favorable start. However, this early optimism quickly faded as the index slid to a low of 75,817. The selling pressure was exacerbated by cautious sentiment in global markets, which reflected the uncertainty surrounding international trade policies, especially after US President Donald Trump’s comments on tariffs.
Despite these early challenges, the Sensex mounted a robust recovery, surging to a high of 76,461 in the latter part of the session. It ultimately settled with a gain of 567 points, closing at 76,405. The broader NSE Nifty 50 index also followed a similar trajectory, dipping below the 23,000-mark at one point to hit a low of 22,981. However, it too managed to recover, ending 131 points higher at 23,155.
The day’s recovery was largely driven by strong performances from large-cap IT stocks and banking sector heavyweights, including HDFC Bank, Infosys, and TCS. These stocks provided much-needed support, offsetting losses in sectors like realty, capital goods, and select auto stocks.
Key Contributors to the Rally
Among the top contributors to the rally, HDFC Bank stood out as a major driver of positive sentiment. The bank posted a 2% year-on-year increase in its Q3 net profit, amounting to Rs 16,735.5 crore, surpassing analysts’ expectations of a decline. This result was well-received by investors, with the bank’s stock gaining 1.7%, closing at Rs 1,669.
In the IT sector, Infosys and TCS were the standout performers, with both stocks rising around 3% each. Tech Mahindra, HDFC Technologies, and Bajaj Finserv also contributed to the sector’s strength, posting modest gains between 1-2%. The overall rally in the IT sector was in response to improving earnings growth prospects, with investors positioning for the sector’s continued outperformance amid global demand for digital transformation services.
Private banking stocks, led by Kotak Bank, IndusInd Bank, and HDFC Bank, also saw a solid upward momentum. These stocks benefitted from a strong earnings season and an optimistic outlook for the banking sector, despite headwinds from concerns over asset quality.
On the downside, Tata Motors was one of the notable losers, falling more than 2%, weighed down by concerns over the global auto market slowdown. Power Grid, Axis Bank, and SBI also saw declines, contributing to the day’s mixed performance.
Sectoral Performance: IT and Real Estate Diverge
Sector-wise, the day was characterized by a stark divergence between the IT and realty sectors. The BSE IT indexwitnessed a strong rally, gaining over 2%, led by the aforementioned stocks of Infosys and TCS. This was reflective of broader investor optimism in the tech space, which continues to benefit from both domestic and global demand.
In contrast, the BSE Realty index took a significant hit, falling to a 10-month low. The sector has faced significant pressure due to concerns over interest rates and a potential slowdown in residential demand. Similarly, the Capital Goods index also faced headwinds, falling nearly 2%, as investors adjusted their expectations for infrastructure and industrial growth.
The broader market also faced some pressure. The BSE MidCap index declined by 1.2%, while the SmallCap index fell by 1.6%. However, both indices showed signs of recovery in the latter part of the session, echoing the overall market rebound.
Global Cues: Mixed Signals from International Markets
Global markets offered a mixed bag of cues on Wednesday. The Asia-Pacific region saw mixed performance, with Japan’s Nikkei 225 rising 1.5%, Australia’s ASX 200 up by 0.4%, and South Korea’s Kospi adding 0.7%. On the other hand, Hong Kong’s Hang Seng Index slipped 1.3%. The global sentiment was influenced by US President Trump’s less aggressive-than-expected stance on tariffs.
Overnight, US markets had closed on a positive note. The Dow Jones Industrial Average rose by 1.24%, the S&P 500gained 0.88%, and the Nasdaq Composite climbed 0.64%. The optimism was largely driven by investor perceptions that Trump’s rhetoric on international trade, particularly with China, might not be as severe as initially feared. Trump also suggested potential tariffs on Mexico and Canada, but his overall approach was seen as less aggressive than anticipated, helping to calm investor nerves.
Volatility with Underlying Strength
The Indian market’s recovery on Wednesday was a testament to the resilience of certain sectors, particularly IT and banking. Despite early volatility and a mixed global backdrop, strong earnings reports and a rebound in key sectors provided the necessary momentum for the market to close in the green. Moving forward, investor sentiment will likely remain shaped by earnings results, global trade dynamics, and domestic economic indicators. However, with earnings growth remaining robust in some segments, there is potential for continued upward momentum, albeit with volatility in the near term.
