Sensex, Nifty end lower but recover sharply from lows: Here's what drove today's market

The equity benchmark indices ended in the red on Tuesday (September 29), but recovered sharply from the day's lows, with the Sensex falling 243 points to 72,529 and the Nifty declining 64 points to 22,716.

The Nifty held above the 22,700 mark, even as the index remained on course for its worst September series in 25 years, down nearly 7%.

Here are the key factors from Tuesday's session:

Nifty IT falls over 1%

Information technology stocks remained weak, with the Nifty IT index falling more than 1%. Wipro was the top Nifty loser.

Nifty Bank recovers nearly 500 points from low

The Nifty Bank ended 212 points lower at 54,260, but recovered nearly 500 points from the day's low. The Nifty Midcap Index also ended lower, falling 595 points to 59,319.

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Nearly 30 Nifty stocks end lower

Selling remained broad-based, with nearly 30 Nifty stocks closing in the red. Declining stocks fell by as much as 3%. Market breadth remained in favour of declines, with the advance-decline ratio at 2:3.

Insurance and Tata Group stocks remain under pressure

Insurance stocks extended their losses, with PB Fintech falling 6% and TurtleMint declining 5%. Tata Group stocks also slipped following Tata Trusts' proposal, with Tata Chemicals falling 4%. Honasa Consumer declined 5% following block deals involving more than 4% of its equity.

Voltas, Blue Star erase gains; BSE and Dr Reddy's gain

Voltas and Blue Star erased their gains and ended 3-4% lower amid expectations of price hikes. On the other hand, BSE surged 3% in the last hour of trade, ahead of its inclusion in the Nifty. Dr Reddy's was the top Nifty gainer following a double-upgrade by a brokerage.

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From the Sensex basket, Kotak Mahindra Bank Ltd, Tata Steel Ltd, NTPC Ltd, Coal India Ltd, Bharti Airtel Ltd and Power Grid Corporation of India Ltd were the major gainers. Titan Company Ltd, HCL Technologies Ltd, UltraTech Cement Ltd, Max Healthcare Institute Ltd, Bajaj Finance Ltd and Infosys Ltd were the biggest laggards.

Dharmesh Kant, Head of Research, Chola Securities, on the market, said, "The scene is getting gloomier, and more and more margin calls on the MTF side is getting triggered as the market trickles down. Now there has also been selling in the mid and smallcap basket, where most of the MTF positions were taken. So that is also getting hammered, and this is getting into a cascading kind of an impact.

We were personally working at 23,000 levels on the Nifty and thought that it's not going to breach that based on the fundamentals of the earnings flow, which were there till Q1, also pensioning in around 100-150 basis points kind of a margin hit going into Q3 and Q4.

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So Q2 it won't be that much. I mean, a 75 to 100 basis point kind of margin hit would be there, and the high base of last year also was taken into account, and we were considering eight to 10% kind of a blanket revenue growth, having regard to the inflation for the second half of February to December.

But the market has slipped below that; selling is getting aggravated, and people are now staying on the sidelines and just being observers of the market rather than buying it. This can last for 10-15 days.

But if somebody is a buyer here, into quality stocks, definitely rewards will be there in the next three to four months. And there are ideas, for example, banking space - people are talking about rising bond yields eating into the profitability on the other income side. But this is an opportunity to get in there at decent valuations; say, IndusInd Bank or Axis Bank looks pretty attractive, and so do the other ideas."