Indian benchmark indices staged a recovery on Tuesday, opening higher after hitting a seven-month low in the previous session. Gains in blue-chip stocks like HDFC Bank, ICICI Bank, Infosys, and Axis Bank helped lift sentiment, even as global markets reeled from the fallout of a new Chinese AI development.
The Sensex rose by 303 points (0.41%) to 75,694, while the Nifty 50 climbed 70 points (0.30%) to 22,898 as of 9:33 a.m. Notably, the Nifty Bank index gained over 1%, signaling renewed momentum in the financial sector.
Global Markets Rattle Under AI Fears
While Indian markets saw a positive start, the global picture remained turbulent. Asian stocks, especially in Japan, mirrored Wall Street's losses after a steep selloff in U.S. semiconductor stocks. The trigger? A groundbreaking Chinese AI model from startup DeepSeek, which has raised concerns about heightened competition in the tech sector.
The Nasdaq Composite posted its worst single-day percentage drop since December 18. Nvidia, a leader in AI and semiconductors, saw its shares plunge 17%, erasing $593 billion from its market valuation.
Key Levels and Strategies for Indian Investors
Market analysts are watching the Nifty's 23,000-23,050 range as key resistance, with 22,800-22,750 providing potential support. "If the Nifty slips below 22,750, selling pressure could intensify and push the index to 22,600," said Shrikant Chouhan, head of equity research at Kotak Securities.
He suggested reducing weaker positions near resistance levels and exploring select opportunities for medium- to long-term gains if the index drops to 22,600. Monday's trading session saw heavy selling, with foreign institutional investors (FIIs) offloading equities worth ₹5,015 crore. However, domestic institutional investors counterbalanced this with purchases totaling ₹6,642 crore.
Traders are urged to tread cautiously. "Avoid carrying overnight positions and implement strict stop-loss strategies to mitigate risk," advised Hardik Matalia of Choice Broking.
Historical Parallels and Broader Market Impacts
The recent market turmoil evokes comparisons with past crises, such as the 2008 financial meltdown and the early 2000s dot-com bust. Both saw sharp initial declines before eventual recoveries, offering a glimmer of hope for patient investors.
Adding to the mix, international crude oil prices dipped on Monday amid concerns over weak energy demand from China. However, the losses were cushioned by a softer U.S. dollar. Oil prices ticked slightly higher in early Asian trading on Tuesday ahead of the Federal Reserve's meeting.
Indian investors suffered a massive blow on Monday, losing ₹9.28 lakh crore in market wealth as indices slumped. Major names like HCL Tech, Zomato, and Tech Mahindra led the declines, with broader losses across sectors.
