The benchmark equity indices pared their early losses on Tuesday as investors resorted to value buying at lower levels, helping the Sensex recover nearly 300 points from the day's low and the Nifty moving above the 24,100 mark.
As the session progressed, buying interest emerged after the sharp decline in early trade. At 11:15 a.m., the Sensex was trading at 77,325.27, down 291.12 points or 0.38 percent. The Nifty quoted at 24,131, down 80 points or 0.33 percent.
Key reasons behind market paring losses
1) Value buying: Investors bought shares at lower levels after the sharp decline in early trade, supporting a recovery in the benchmark indices.
Earlier in the session, the Sensex had dropped 614.82 points or 0.79 percent to 77,001.58, while the Nifty declined 172.90 points or 0.71 percent to 24,038.10.
2) Weekly expiry: Tuesday also marked the weekly expiry of derivative contracts, a session that typically sees heightened market volatility. On expiry day, traders unwind or roll over their futures and options positions, resulting in higher trading volumes and sharp swings in stock prices and benchmark indices, particularly during the latter half of the trading session.
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3) Key technical support at 24,000: The market recovered after the Nifty tested the 24,038 level, with 24,000 seen as an important technical support zone.
"The range of 24,300 on the upside and 24,000 on the downside remains crucial. A decisive breakout above 24,300 could trigger an up move towards 24,530, the previous swing high, while a breakdown below 24,000 may lead to a retest of the 23,800-support zone," said Devarsh Vakil, Head of Prime Research at HDFC Securities.