Market Rebound

Indian equity markets reversed early volatility to post substantial gains by the afternoon session, with the Sensex surging over 800 points to reclaim the 75,300 level and the Nifty advancing nearly 250 points to cross 23,600.

IT Stocks Struggle Amid AI Concerns

Despite the broader market's gains, the information technology index went against the trend, declining over 2.5% and remaining the only sectoral index in negative territory. This continued weakness in IT stems from ongoing investor worries about Artificial Intelligence's disruptive power. Analysts cite fears of slower global tech spending and less certainty about the future of traditional IT outsourcing.

Why the Market Rebounded

The recovery was largely due to reduced selling pressure after a few quiet trading days. Market veteran Deepak Jasani noted that the rebound was less about strong new buying and more about heavy selling slowing down, especially with BSE derivatives expiring this week. Money that was in tech stocks is now reportedly moving to other areas.

Value buying was also key, as investors sought out sectors that had recently dropped significantly. The Sensex and Nifty had fallen nearly 4% over four days, affected by worries about higher oil prices and government spending cuts. This dip created opportunities for bargain hunters in sectors like pharmaceuticals, healthcare, banking, metals, chemicals, energy, Fast-Moving Consumer Goods, and cement, all of which saw gains exceeding 1%.

Rupee Falls, Market Volatility Rises

Meanwhile, the Indian Rupee fell to new lows against the US dollar, trading near 96, due to ongoing selling by foreign investors and high crude oil prices. At the same time, the India Volatility Index (India VIX) increased by over 3% to around 19, indicating greater market uncertainty.