Indian equities gain over 1% after previous day's carnage; here's what leading to recovery

Indian equities as reflected in the GIFT Nifty futures showed remarkable resilience after the previous day's carnage amid global market sell-off. At the last count, Nifty was up over 1 per cent or 264 points at 24,320.3, while the Sensex was 1 per cent up or 912.36 at 79,671.72. In the previous day's correction, Sensex has come off nearly 2,300 points off fresh-highs.

Here are the likely reasons why the markets recovered after a brutal sell-off in Indian equities amid global markets mayhem:

Asian markets registered sharp gains:

Asian stocks registered sharp gains, with Japanese markets recovering the most after tumbling into a bear territory.  The sentiment was also aided by bargain buying as the market bet on fundamentally strong stocks which may benefit in the lower interest rate regime going forward. At the last count, Japan's Nikkei index was up nearly 10 per cent, posting the highest gains among its peers.

In entirely, Japanese stocks tumbled amid hawkish signals from the central bank.

Fed seen to cut rates earlier than September

As economic growth concerns resurface in the world's most developed economy, the US central bank may be nudged to cut interest rates earlier than expected to fuel growth. However in contrast, Dr.  V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that it appears that the US recession fears are a bit premature and overdone.

Across-the-board buying sentiment

An across-the-board buying sentiment also triggers gains on the Indian indices, with realty, IT and metal pack leading the gains with up move of up to 3 per cent.

Technicals

Anand James, Chief Market Strategist, Geojit Financial Services remarked that the bounce from the vicinity of the 50 day SMA has given us hopes that a recovery is being attempted. The first leg of such a recovery move should aim for 24389, where a pause is likely, but a second leg to the recovery move could also be expected which however needs a reclaiming of 24540/570 for sustenance. Alternatively, inability to make any head way beyond 24389 or a premature turn back below 24119 could signal regrouping of bears.