Summary of this article
Sensex and Nifty recovered sharply from intraday lows, but ended the session marginally lower
Rising crude oil prices, West Asia tensions, a weaker rupee, and FII selling weighed on sentiment early in the day
IT stocks remained under pressure, with the Nifty IT index plunging 5.57 per cent amid profit booking and weak global cues
Banking stocks led the rebound, helping benchmark indices erase a large part of their losses
Buying at key support levels and short covering accelerated the market's recovery in the second half
Benchmark equity indices suffered a deep sell-off in early trade on June 3 before recouping most of their losses and trading marginally lower toward the end of the session. IT stocks emerged as the main drag on the benchmark indices, while gains in banking and auto stocks helped the indices to recover a large part of their earlier losses.
Broader markets also staged a strong comeback just like the benchmarks in the latter half of the session. The Nifty Midcap 100 and Smallcap 100 indices recovered more than 1.50 per cent from their intraday lows, before ending the day with modest declines of 0.42 per cent and 0.11 per cent, respectively.
Ajit Mishra, senior vice president, research, at Religare Broking, said the initial weakness stemmed from escalating geopolitical tensions in the West Asia, which pushed crude oil prices higher.
As of 3:30 PM, the international benchmark Brent crude oil futures traded at $98.98 per barrel, up by 3.11 per cent, while the US benchmark West Texas Intermediate (WTI) crude oil futures traded higher by 3.32 per cent at $96.98 a barrel.
A weaker rupee, losses in IT stocks, and continued foreign institutional investor (FII) outflows had further weighed on market sentiment in the early session.
Bank Stocks Rally, IT Stocks Drag
Among sectoral indices, banking stocks provided the strongest support to the market. The Nifty PSU Bank index surged 1.70 per cent, while the Nifty Private Bank index gained 0.70 per cent. The Nifty Bank index, which tracks the performance of the country's largest and most actively traded banking stocks, ended 0.88 per cent higher.
Auto stocks also staged a smart recovery in the second half of the session, after falling nearly 0.75 per cent during the session. The Nifty Auto index reversed losses to close 0.05 per cent higher.
Defensive sectors mirrored the broader market's recovery. Both the Nifty Pharma and Nifty Healthcare indices traded in negative territory during the day before ending with gains of 0.33 per cent and 0.54 per cent, respectively.
On the other hand, The Nifty IT index witnessed one of its biggest single-session declines, plunging 5.57 per cent as heavyweights such as Tata Consultancy Services (TCS), Persistent Systems, LTIMindtree and Coforge came under intense selling pressure.
The sell-off was largely driven by profit booking following the sector's nearly 8 per cent rally over the previous three sessions. IT stocks also tracked losses in their overseas peers.
The American Depository Receipts (ADRs) of Infosys and Wipro tumbled as much as 8 per cent overnight after Wall Street-listed technology services stocks came under pressure following a series of brokerage downgrades and target price cuts, triggering a broad-based sell-off across the sector.
Nifty 50 Top Gainers & Losers
Among the Nifty 50 stocks, Apollo Hospitals, Tata Motors Passenger Vehicles, InterGlobe Aviation, Max healthcare, State Bank of India, ICICI Bank, and ONGC were the biggest gainers. Kotak Mahindra Bank, HDFC Bank, and Axis Bank also ended in green.
On the other hand, TCS fell as much as 8.25 per cent, its worst single day fall since the Covid-19 rout in March 2020, emerging as the biggest Nifty 50 loser. Following the tech services giant, Tech Mahindra, HCL Technologies, Infosys, and Wipro also fell between 2.83 per cent and 6.45 per cent. ITC, Eternal, Larsen & Toubro, Adani Enterprises, Jio Financial Services, SBI Life Insurance, and Tata Consumer Products also fell in the range 1 per cent to 2.50 per cent.
Why Stock Market Recovered Today
Here's what led to the sharp turnaround in the market during the second half of the session.
Recovery In Banking Stocks: The market's recovery from intraday lows was largely driven by a strong rebound in banking stocks, particularly public sector lenders. According to Vinod Nair, head of research at Geojit Investments, optimism around potential policy measures aimed at attracting foreign investments boosted investor sentiment, while stronger credit growth trends helped PSU banks outperform their private-sector counterparts.
"Given the heavy weight of banking stocks in the benchmark indices, the rebound in the banking space played a crucial role in lifting both the Sensex and Nifty 50 off their intraday lows," explained Hitesh Rathi, technical analyst (Equity & Derivatives) at Angel One.
Technical Reason: Analysts are also attributing the recovery to technical bounce at key level. Hitesh Tailor, Technical Research Analyst at Choice Broking, said, "The sharp intraday rebound in equities was primarily driven by strong buying interest emerging near key technical support zones. Notably, the previous session had also witnessed buying at lower levels, highlighting that market participants continue to view declines as opportunities to accumulate quality stocks."
He added that the recovery gathered momentum as traders rushed to cover their short positions after the benchmarks bounced off their intraday lows. With key support levels holding firm, market participants who had bet on a deeper correction unwound their bearish trades, helping fuel a sharp rebound in the second half of the session.
