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.

Indian equity markets opened on a tepid note on Tuesday morning, failing to sustain initial gains as profit booking at higher levels pulled benchmark indices into negative territory. The session witnessed divergent sectoral performance amid cautious sentiment driven by renewed tariff-related concerns and rising geopolitical tensions.

Market Performance Overview

The benchmark indices showed mixed opening trends before declining through the morning session. Key market movements by 10:00 am included:

Ponmudi R, CEO of Enrich Money, noted that "Indian equity markets are set to open on a steady to mildly positive note on Tuesday, extending yesterday's sharp rebound from intraday lows. However, the broader undertone stays cautious as volatility has picked up amid renewed tariff-related concerns and rising geopolitical tensions in the Middle East."

Sectoral Performance and Stock Movements

The morning session witnessed divergent sectoral performance, with metal stocks leading the gainers while information technology counters faced selling pressure following mixed quarterly results from sector heavyweights.

Top Gainers

Top Decliners

Technical Analysis and Market Outlook

Technical analysts suggested the market remains in a consolidation phase despite Monday's sharp recovery. Ponmudi R explained that "The Nifty 50 staged a measured recovery with a gap-up opening after the recent corrective phase, but failed to sustain momentum as profit booking at higher levels pulled the index back into the red. The 50-day EMA at around 25,895 now acts as an immediate intraday resistance, and a sustained reclaim of this level will be critical to restore upside momentum."

Shrikant Chouhan, Head Equity Research at Kotak Securities, outlined key technical levels:

Chouhan noted that "below 25,600/83,300, sentiment could change."

Global Influences and Commodity Markets

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, highlighted ongoing global factors: "Geopolitical developments and President Trump's comments and actions will continue to influence markets. Trump's weaponisation of tariffs have already impacted global trade and particularly countries which have been targeted with penal tariffs."

Devarsh Vakil, Head of Prime Research at HDFC Securities, noted positive global cues: "The S&P 500 and Dow registered record closing highs on Monday as technology stocks and Walmart gained, with investors largely dismissing concerns about the Justice Department's criminal investigation of Federal Reserve Chair Jerome Powell. The Nifty 50 broke its five-day losing streak, climbing 106 points to close at 25,790."

Commodity markets witnessed significant action, with Rahul Kalantri, VP Commodities at Mehta Equities Ltd, observing: "Gold and silver surged sharply on Monday as uncertainty over the Federal Reserve's outlook combined with rising geopolitical tensions in Iran." He added that crude oil prices remained volatile with support at $58.70-57.80 and resistance at $60.20-60.90.

Market participants remained focused on December-quarter earnings, particularly from the IT sector, which could drive stock-specific action through the session. Dr Vijayakumar pointed to expectations that trade negotiations would resume on January 13, noting "the necessity of a US-India trade agreement was evident yesterday when the market bounced back sharply."