Sensex Surges 650 Points from Day's Low, Nifty Recovers Above 23,400: Factors Behind Market Reversal

Indian Stock Market Sees Sharp Recovery Amid Value Buying

The benchmark indices Sensex and Nifty have recovered sharply from intraday lows as value buying in beaten-down stocks has picked up momentum. At around 10 a.m., the Sensex was up 120.40 points or 0.16 percent, reaching 74,466.57, while the broader Nifty advanced to 23,415.30, up 9.70 points or 0.041 percent.

Government Aims to Attract Foreign Capital

The government is planning to scrap all taxes on foreign portfolio investments in government securities, which could help boost such inflows. This decision is likely to be implemented through an ordinance, as reported by CNBC-TV18. The government is looking to attract foreign capital to counteract pressure on its rupee currency, which has weakened by more than 5% since the start of the year, squeezed by higher oil prices and foreign portfolio outflows in equities. To put this in perspective, here is a comparison of the government's current tax policy on foreign investments:

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Foreign investors have maintained net positive flows into Indian government debt this year, investing $1.4 billion, but nearly $28 billion has been pulled from equity markets.

Global Geopolitical Developments Ease Tensions

The Trump administration has announced that Israel and Lebanon have agreed to implement a ceasefire to end hostilities, boosting hopes for a broader deal to end the Iran conflict. This development comes as a welcome relief, as it could potentially ease some of the geopolitical concerns that have been affecting global markets.

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