Indian Stock Market Bounces Back Slightly Amid IT Stock Surge

After a significant downturn, Indian stock indices saw a modest recovery, mainly driven by a surge in IT sector stocks. Despite the rebound, most sectors recorded losses due to ongoing economic concerns and uncertainties regarding global trade policies under the Trump administration.

In the wake of a severe market dip, Indian stock indices managed a slight recovery on Wednesday, buoyed by a robust performance from the IT sector, which climbed 2.1%. However, contrasting this gain, the Nifty Realty index suffered a steep 4.56% decline.

Market analyst Vinod Nair from Geojit Financial Services attributed the modest rebound to strong financial results from a major private bank, despite the heightened market volatility. This volatility continues amid worldwide apprehension over potential changes in global trade dynamics under former US President Donald Trump's approach to BRICS, involving India as a key member.

The IT sector's recovery was a bright spot, especially as mid and small-cap stocks saw ongoing underperformance due to valuation challenges, stated Nair. Banking stocks shared some of the recovery, yet most sectors experienced losses, with the real estate sector enduring the most significant drops for consecutive sessions.

Additionally, the announcement of the US considering reduced tariffs on China offers temporary relief but does not eliminate existing concerns. A cooling dollar index may ease the rupee's depreciation, noted Nair. Despite the day's market uptick, Shrikant Chouhan from Kotak Securities warned of the market's prevailing weak short-term trend.

India's stock markets reflect struggles with domestic economic weaknesses. In 2024, the Sensex and Nifty showed about 9-10% growth, a contrast to their 16-17% cumulative gains in 2023, and only 3% in 2022. Sluggish GDP growth, foreign investment outflows, increased food prices, and slow consumption dampen investor enthusiasm moving into 2024.

Despite minor gains, the Sensex remains 10,000 points shy of its peak at 85,978 points, and has decreased by 3% since the start of the year.

(With inputs from agencies.)