Sensex, Nifty recover over 1% from day's low: Has the market bottomed out?

The Sensex surged 1.42 per cent (1,071.33 points) to 76,459.72, while the Nifty50 bounced 1.37 per cent (312.5 points) to 23,110.85, suggesting that some support is still present

The Indian benchmark indices, Sensex and Nifty50, staged a sharp recovery after falling initially on Wednesday, February 12, 2025. 

 

The Sensex surged 1.42 per cent (1,071.33 points) from day's low to 76,459.72, while the Nifty50 bounced 1.37 per cent (312.5 points) from day's low to 23,110.85, suggesting that some support is still present.

 

Despite the recovery, independent analyst Ambreesh Baliga believes the market has not yet bottomed out. The brief rally may be linked to positive expectations surrounding the meeting between Prime Minister Narendra Modi and President Donald Trump, which could yield favourable outcomes for the market. This, coupled with positive Mutual Fund (MF) flows have helped markets stage a recovery today.  Modi and Trump meet will likely focus on agendas related to tariffs, immigration and defence. 

 

Apart from that, the equity-oriented mutual fund (MF) schemes have attracted net inflows of Rs 39,688 crore in January, despite a sharp selloff in the market. While the inflows were 3.6 per cent lower compared to December, they were 21 per cent above the average monthly inflows for calendar year 2024. READ MORE

 

Meanwhile, Ravi Singh, senior vice president of retail research at Religare Broking, too, said that the markets have not yet bottomed out. The current market pullback is not sustainable due to weak earnings, FIIs selling, coupled with the uncertainty around Trump tariffs. Thus, the markets will continue the downward move, and the next Nifty target would be 22,800. On the upside, the Nifty could max go up to 23,350, he added. 

 

Also Read: Need a serious fall in Indian markets before I start buying: Jim Rogers

 

Jigar S Patel of Anand Rathi observed that Nifty's recent correction over the last six sessions halted after reaching an intraday low of 22,798.35, which closely matches the low of 22,786.90 seen on January 27, 2025. On the weekly chart, Nifty formed a bullish engulfing pattern on February 1, 2025, with a low of 22,786.90, indicating the potential for a bullish reversal. 

In today's session, he added, Nifty respected this key low, showing a strong recovery of 320 points, signaling renewed buying interest. Additionally, the S1 floor pivot and a long-standing trendline converged near the 22,798 level, contributing to a notable rebound of 322 points from the day's low.  

  If Nifty closes above 23,100, it will form a bullish hammer pattern near this key support zone, potentially confirming a temporary bottom. However, for a more sustainable long-term bottom, Nifty would need to close decisively above 23,800 on a daily basis. Such a move would indicate stronger bullish momentum and could reverse the ongoing corrective phase. Traders should monitor these levels closely for confirmation of a trend reversal.

  Meanwhile, Prashanth Tapse, senior VP (research) at Mehta Equities said that the market strength is likely to be confirmed if the Nifty crosses its 200-day moving average (DMA) at 24,046.

 

What happened earlier in the day?

 

Sensex and Nifty extended their loss to the sixth day in a row. The BSE Sensex plummeted 905.21 points, hitting a low of 75,388.39, while the Nifty50 index fell 273.45 points to 22,798.35.

 

The persistent selling by Foreign Institutional Investors (FIIs), disappointing Q3 results, valuation concerns over SMID stocks, and uncertainty about Trump tariffs have been key factors contributing to the market’s decline.

 

Also Read: Ongoing selloff in equity market fails to close mid, smallcap valuation gap

 

Also, the shares of smallcap companies have been under pressure amid tepid corporate earnings growth in the December 2024 quarter (Q3-FY25) and selling by foreign portfolio investors (FPIs). In the past two months, the smallcap index on the NSE has tanked 17.5 per cent its record high level of 57,827.69 touched on December 12, 2024. The index is on the cusp of hitting a 'bear phase', termed as a fall of 20 per cent or more from the recent peak. READ MORE