Indian benchmark equity indices staged a recovery on Friday afternoon, paring significant losses from earlier in the session. The Sensex climbed approximately 200 points from its intraday low to trade at 83,605.62, while the broader Nifty hovered above the psychologically important 25,700 level around 3:15 p.m.

The recovery came after a sharp morning sell-off that saw both indices decline significantly. The Sensex had slipped 767.82 points or 0.91% to 83,413.14, while the Nifty fell 246.95 points or 0.95% to 25,629.90 during the session's low.

Market Performance Overview

The indices have experienced sustained selling pressure over recent sessions, with both benchmarks declining over the past four trading days.

Key Drivers Behind Market Recovery

US Supreme Court Tariff Ruling Optimism

Market sentiment received support from expectations surrounding a crucial US Supreme Court ruling on President Trump's use of emergency powers to impose tariffs. The case centers on whether the President can invoke the International Emergency Economic Powers Act (IEEPA) to levy tariffs without congressional approval. During November arguments, justices indicated skepticism over such authority.

Ajit Mishra, Senior Vice-President (Research) at Religare Broking, noted that export-oriented stocks experienced a rebound driven by hopes of potential tariff relief. However, he cautioned that "market participants should temper their expectations, as the US government has planned other legislative measures to maintain or even raise tariffs in the event of an adverse ruling."

Easing Geopolitical Tensions

Geopolitical concerns showed marginal improvement after President Trump cancelled a second wave of attacks on Venezuela, citing a "sign of seeking peace." Trump also indicated that major oil companies would invest in the country, contributing to reduced market anxiety.

Value Buying Activity

Traders engaged in value buying following the four consecutive sessions of decline. The sustained selling pressure created opportunities for investors to purchase stocks at relatively lower levels, contributing to the afternoon recovery.

Technical Analysis Outlook

Devarsh Vakil, Head of Prime Research at HDFC Securities, highlighted that the Nifty has breached several key technical support levels. The index violated its 50-day exponential moving average at 25,911 and broke below the previous swing low of 25,878 on the daily chart.

Vakil noted that the next meaningful support level appears near 25,700, which coincides with the December 2025 swing low. On the upside, the 26,000-26,050 zone is expected to act as strong resistance in the near term.

Market Outlook

The afternoon recovery demonstrates the market's resilience despite sustained selling pressure over recent sessions. The combination of potential tariff relief, reduced geopolitical tensions, and value buying activity provided the necessary support for indices to recover from their intraday lows. However, technical indicators suggest caution, with key support and resistance levels clearly defined for near-term trading ranges.

The Nifty Realty Index extended its decline in Monday's trading session, falling close to 3% and pushing its cumulative correction to 17% from the 52-week high. With losses of this magnitude, the index has officially entered bear market territory, reflecting sustained selling pressure across real estate counters.

Major Realty Stocks Lead Sectoral Decline

Heavyweight real estate companies bore the brunt of the selloff, with several prominent names emerging among the session's top laggards:

The weakness in realty stocks contributed significantly to the sector's drag on the broader market, as selling pressure remained visible across most real estate counters.

Broader Market Context

The realty sector's decline occurred amid a broader market selloff, with Indian equities trading near the day's lows. Key market indicators reflected the negative sentiment:

• Benchmark indices declined nearly 1% each
• Nifty slipped below the 25,700 mark
• Realty and capital market goods stocks led sectoral losses

The combination of sector-specific weakness and overall market pressure weighed heavily on investor sentiment throughout the session.

Keystone Realtors Reports Mixed Q3FY26 Performance

Among individual company updates, Keystone Realtors, the Mumbai-based developer, reported mixed operating performance for the December quarter:

While the company demonstrated healthy volume growth with a 13% year-on-year increase in area sold, value metrics softened with both pre-sales and collections declining by 3%, suggesting a possible shift in the sales mix.

Analyst Outlook for Sector Recovery

Despite the sharp correction, some market analysts see potential for recovery ahead. Venugopal Garre of Bernstein expects a potential turnaround in Indian real estate stocks in 2026, upgrading the sector from its earlier 'Underperform' rating. Key factors supporting this outlook include:

• Property cycles typically spanning six to seven years
• Sharp correction in stock prices creating value opportunities
• Expected 50 basis point rate cut over the course of the year
• Potential support to housing demand as borrowing costs moderate

The analyst views the current correction as a catch-up opportunity following a weak 2025 performance, with easing interest rates potentially providing incremental support to housing demand and valuations.