Markets rebound sharply, snap 10-day losing streak

Benchmark indices staged a strong comeback on Tuesday, ending a 10-day losing streak as investor sentiment improved amid value buying at lower levels and positive cues from Asian markets. The Sensex surged 943.87 points, or 1.29 percent, to close at 73,933.80, while the Nifty gained 312.25 points, or 1.41 percent, to settle at 22,394.90. Heavyweights such as Tata Steel, Mahindra & Mahindra, HCL Technologies, Tech Mahindra, Adani Ports, Tata Motors, Power Grid, NTPC, Infosys, Tata Consultancy Services, and Bharti Airtel emerged as top gainers.

Key Drivers Behind the Rally

Hopes of Tariff Relief from the US: Investor sentiment received a boost following comments from US Commerce Secretary Howard Lutnick, suggesting that the Trump administration may ease certain tariffs. Lutnick indicated that a structured approach toward tariff reduction, particularly on Mexican and Canadian imports, could be announced as early as Wednesday. This development fueled optimism, lifting global markets.

Strength in Asian Markets: The domestic rally was further supported by gains in Asian equities. Hong Kong’s Hang Seng Index rose nearly 2 percent as China announced fresh stimulus measures to counter trade tensions with the US. Japan’s Nikkei also traded higher, adding to the positive momentum.

Broader Market Recovery: The Nifty Midcap 100 and Smallcap 100 indices registered nearly 2 percent gains, rebounding from previous losses. Analysts pointed out that oversold conditions had made valuations attractive, leading to strong buying interest. "The recent sell-off breached multiple support levels, but the market’s oversold nature presented an opportunity for a short-term rebound," said Rajesh Bhosale, an analyst at Angel One. However, he cautioned that uncertainty around global trade policies remains a key risk.

Value Buying in Blue-Chip Stocks: Large-cap stocks, including Tata Steel, Adani Ports, and TCS, saw buying interest, with gains of up to 4 percent. Market analysts noted that several high-quality stocks had become relatively cheap after the recent correction, prompting investors to accumulate shares.

Expectations of Benefit: The imposition of higher US tariffs on China, Mexico, and Canada is expected to create new opportunities for Indian exporters. India had previously gained when similar tariff measures were imposed during Trump’s first tenure. Experts believe that sectors such as agriculture, engineering, textiles, machine tools, chemicals, and leather could see increased shipments to the US. "Indian exporters stand to gain as supply chain realignments take place," said S C Ralhan, President-designate of the Federation of Indian Export Organisations (FIEO).

Despite the sharp recovery, analysts remain cautious. "The rebound from lower levels is encouraging, but global factors continue to play a significant role in market movements," noted Shrikant Chouhan, Head of Equity Research at Kotak Securities.

He pointed out that indices are currently trading near key support zones of 22,000/72,800 and 21,800/72,300. A sharp bounce from these levels could signal a strong reversal of the recent sell-off, but a close below 21,800/72,300 could increase the likelihood of further declines towards 21,500/71,500.

 Chouhan advised investors to adopt a selective buying approach at current levels, with a medium-term outlook, while adding positions on dips. He identified resistance at 22,200/73,400 and 22,500/74,300, levels that traders will be closely monitoring in the coming sessions