Indian equity markets witnessed sharp intraday volatility on Tuesday, with benchmarks experiencing significant declines despite opening on a positive note. The BSE Sensex tumbled 933 points from its day's peak, while the Nifty 50 slid more than 1%, erasing ₹2.60 lakh crore in market value as selling pressure intensified through the session.

Market Performance Overview

The trading session began with optimism as benchmarks opened modestly higher, extending Monday's tentative rebound after snapping a five-day losing streak. However, the relief rally proved short-lived as profit-taking emerged in key heavyweight stocks.

| Index Movement: | Peak | Low | Decline || | ---: | :--- | :--- | :--- | | Sensex: | 84,258.03 | 83,324.84 | 933 points | | Nifty 50: | 25,899.80 | 25,627.40 | 272 points |

By 1:13 PM, the Sensex was trading 445 points lower at 83,433, representing a 0.53% decline, while the Nifty fell 134 points to 25,656, down 0.52% for the day.

Market Capitalization Impact

The broad-based selling resulted in significant wealth erosion, with the market capitalization of all BSE-listed companies dropping to ₹466.41 lakh crore. The sharp intraday reversal highlighted the fragile sentiment prevailing in the markets despite initial optimism.

Key Factors Behind the Decline

Profit-Taking in Heavyweight Stocks

Selling pressure returned to index heavyweights, with Reliance Industries leading the decline. The oil-to-telecom conglomerate slipped 2% after gaining 0.5% in the previous session. The stock had already lost 7.40% the previous week following the company's statement that it does not expect any Russian crude oil deliveries, keeping investors cautious.

IT Sector Weakness

The information technology pack weighed on overall sentiment, with the sectoral index falling 0.40%. Despite initial optimism around steady early earnings from IT heavyweights, profit-taking emerged as the session progressed.

HCL Technologies dropped 2% despite posting a third-quarter revenue beat. The company narrowed its FY26 growth guidance to 4.00%-4.50% from the earlier range of 3.00%-5.00%. CLSA noted that the revised outlook indicated "a fourth-quarter sequential decline on product business seasonality," prompting investors to lock in gains after the recent rebound.

Market Sentiment

The day's trading pattern reflected the ongoing uncertainty in markets, with initial optimism around U.S. trade developments and steady IT earnings quickly giving way to profit-taking. The sharp intraday reversal from gains to significant losses underscored the volatile nature of current market conditions and investor sentiment.

Indian benchmark indices staged a remarkable recovery from their day's lows, with both Sensex and Nifty paring losses by over 250 points in a volatile trading session. The recovery was driven by multiple factors including optimism around India-US trade discussions, steady corporate earnings, and value buying at lower levels.

Market Performance Overview

The trading session witnessed significant volatility with wide intraday swings across both indices.

The Sensex initially climbed 379.86 points or 0.45% to reach its day's peak before dropping 679.47 points from that high. Similarly, Nifty slipped below the 25,750 mark after touching an intraday high. However, both indices recovered substantially from their lows by mid-session.

Key Drivers Behind Market Recovery

Trade Optimism and Diplomatic Developments

Investor sentiment received a significant boost from renewed hopes of India-US trade momentum. US Ambassador to India Sergio Gor's statement about discussing trade issues between the two countries lifted risk appetite during the volatile session. Market experts noted the importance of these developments, with talks expected to resume as early as January 13th.

Stable Corporate Earnings Start

The earnings season began on a positive note with major IT companies delivering steady results:

• Tata Consultancy Services: Posted marginal revenue beat driven by artificial intelligence demand and North America market growth
• HCLTech: Reported revenue beat and narrowed annual revenue growth forecast

These results provided support to IT stocks and broader market sentiment.

Additional Supporting Factors

Several other elements contributed to the market rebound:

• Value Buying: Emerged at lower levels after earlier profit booking
• Inflation Data: Retail inflation rose to 1.33% in December from 0.71% in November, remaining within RBI's target range
• Global Cues: Asian indices including South Korea's Kospi, Japan's Nikkei 225, and Hong Kong's Hang Seng traded higher
• Banking Recovery: Nifty Bank index rose up to 0.30% with HDFC Bank gaining 0.60%

Individual Stock Performance

Market breadth remained positive with 2,027 shares advancing against 1,463 declining and 175 unchanged.

Technical Outlook

Technical analysts suggest that a sustained move above 25,800 could extend the rally toward resistance levels at 25,900 and 26,000, corresponding to the 50-day and 20-day moving averages. On the downside, the recent low of 25,473 may provide short-term support for the Nifty.

The market's ability to recover from significant intraday lows demonstrates underlying resilience, supported by a combination of diplomatic optimism, steady corporate performance, and tactical buying at attractive levels.