Sensex Rebounds 450 Points from Day's Low, Nifty Surpasses 23,350 Amid Sharp Market Recovery
Market Rebounds on Value Buying Amid Volatility Concerns
The Indian stock market staged a sharp recovery on June 2, with the Sensex and Nifty paring early losses after a value buying emerged at lower levels. This is the fifth consecutive session of losses for the market, with the Sensex and Nifty trading at 74,278.34 and 23,373.65 respectively at 10:29 am.
| Market Index | Previous Close | Current Close | Change |
|---|---|---|---|
| Sensex | 74,267.84 | 74,278.34 | +11 (0.01%) |
| Nifty | 23,382.60 | 23,373.65 | -8.95 (0.04%) |
The recovery was led by information technology stocks, with Infosys, Tata Consultancy Services, Tech Mahindra, and HCL Technologies emerging as the top gainers among the Nifty 50 constituents, rising 2-3%. Hindalco Industries, Tata Steel, and Asian Paints also rose over 1% each. In contrast, Bajaj Finance was the biggest laggard in the 50-stock index, down over 2%.
The broader market indices were in the red, with the Nifty midcap indices down 0.4-0.5% and the Nifty smallcap indices 0.1-0.2% lower. However, the Nifty IT index was the top gainer among the sectoral indices, up over 2%. Analysts said that the Nifty has to decisively trade below 23,200 for further downside in the markets.
Another key reason behind the market recovery was the easing of India VIX, the volatility index, which fell 3% to 16.03 on June 2. This indicates that buyers are finding comfort to buy at these levels. The recovery was also driven by buying in IT shares, which rose for the third straight day amid value buying at lower levels and a recent bullish note by brokerage firm CLSA.
| Company | Change |
|---|---|
| Infosys | +2% |
| Tata Consultancy Services | +2.5% |
| Tech Mahindra | +2.5% |
| HCL Technologies | +2% |
| Hindalco Industries | +1.2% |
| Tata Steel | +1.2% |
| Asian Paints | +1.1% |
The IT shares rose amid strong SaaS company results, which showed continued healthy demand for product engineering and implementation-related work. The results were a positive read-through for Indian IT services firms such as TCS, Infosys, Wipro, HCLTech, LTIMindtree, Hexaware, Coforge, and Persistent. The Nifty IT index was trading 3.5% higher, extending its three-day rally to 7%. TCS and Infosys led the gains by rising 5% each.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Investor Takeaway
Investors should be cautious of the market's sharp recovery and consider diversifying their portfolios.
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