Benchmark indices recover after early slide as rupee strengthens and trade hopes lift sentiment
The Indian equity markets staged a strong rebound on Tuesday, recovering sharply from early losses as optimism over a potential India-European Union free trade agreement (FTA), a firmer rupee, and selective buying in frontline stocks boosted investor sentiment.
After a weak start, both the Sensex and the Nifty erased losses to trade in positive territory by mid-morning.
Markets recover from early lows
In early trade, the Sensex slipped 449.11 points, or 0.55 per cent, to an intraday low of 81,088.59. The Nifty also declined, falling 116.1 points, or 0.46 per cent, to 24,932.55.
However, buying interest emerged soon after. By around 10 am, the Sensex had rebounded 303.62 points to trade at 81,841.32, while the Nifty climbed 106.40 points to hover near 25,155.05 — marking a recovery of nearly 700 points from the day’s low.
Market sentiment improved amid expectations that the long-awaited India-EU Free Trade Agreement could be signed later in the day. Investors are closely tracking developments, viewing the deal as a potential boost to exports, manufacturing, and long-term economic growth.
The rupee bounced back from record low levels, gaining 10 paise to trade at 91.80 against the US dollar in early deals. The recovery followed a pullback in the dollar index and short-covering by traders after the rupee touched a historic low of 92 per dollar last week.
Forex dealers said easing dollar strength and cautious optimism over trade developments helped support the domestic currency.
According to Aakash Shah, Technical Research Analyst at Choice Broking, the Nifty continues to face technical challenges despite the rebound.
“From a technical standpoint, the Nifty is still trading below its short-term moving averages, indicating a fragile setup. The 25,200–25,300 zone remains immediate resistance, while 25,000 is a crucial psychological and technical support. A decisive break below this level could trigger further weakness towards 24,950–24,900,” Shah said.
He added that subdued momentum indicators suggest any recovery may remain selective and stock-specific in the near term.
Outlook
While the rebound reflects improving sentiment, analysts caution that sustained upside will depend on confirmation of the India-EU trade deal, stability in the rupee, and broader global cues.
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