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Benchmark equity indices Sensex and Nifty staged a strong rebound in afternoon trade on Friday, recovering sharply from early losses on positive global cues and foreign fund inflows. The rebound helped investors shrug off concerns around escalating India-Pak tensions.

The Sensex bounced back 850.4 points from the day’s low to hit 79,456.21 around 2:30 PM, while the broader NSE Nifty rose 258 points to reclaim the 24,100 mark, to 24,109.15.

Earlier in the session, both indices witnessed sharp declines with Axis Bank among the top drags. The Sensex had tumbled 1,004.04 points to 78,797.39, while the Nifty slipped 338.1 points to 23,908.60, wiping off all early gains.

Here are the three main factors behind the market turnaround:

1) Strong global cues overpower geopolitical concerns: Markets in Asia were trading firm, with South Korea’s Kospi, Japan’s Nikkei 225, Shanghai Composite and Hong Kong’s Hang Seng all in positive territory. US markets had closed significantly higher on Thursday, supported by strong earnings and upbeat macro data. The Nasdaq rallied 2.74 percent, the S&P 500 gained 2.03 percent, and the Dow rose 1.23 percent. Positive US futures further lifted sentiment, offering support to domestic markets despite worries about India-Pakistan tensions.

2) Signs of easing global trade tensions: China is reportedly considering suspending its steep 125 percent tariff on some American imports, Bloomberg reported quoting sources. The move, if implemented, could ease trade tensions and support global economic recovery.

3) Technical support: The Nifty recovered smartly to trade around its crucial 200-day moving average (DMA) of 24,052, which often acts as a technical support level.

4) Strong FII inflows: Foreign Institutional Investors (FIIs) were net buyers to the tune of Rs 8,250.53 crore on Thursday. Over the past week, FIIs have pumped in Rs 29,513 crore into Indian equities.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said strong FII buying remains a key tailwind for the market. “The other supportive factor is a statement from US Treasury Secretary Scot Bessent indicating that India may be the first to sign a bilateral trade agreement with the US,” he added.

However, Vijayakumar also cautioned that the market still faces headwinds due to uncertainties around India’s potential response to the recent terror attack.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

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