Nifty, Sensex Recover Early Losses To Shrug Off Asia Plunge: Midday Market Update

India's benchmark stock indices recovered from early losses to trade higher by midday on Monday, brushing aside global risk-off sentiment, buoyed by financial and consumer stocks. The recovery comes after the stocks recorded their worst week in over three months. 

At 11:40 a.m., the 50-stock NSE Nifty was trading 22 points, or 0.09%, higher at 24,874, and the 30-stock Sensex was up 108 points, or 0.13%, at 81,296. The Nifty 50 and the Sensex fell as much as 0.4% and 0.36%, respectively, before paring losses to trade higher.

Domestic inflows that have been powering India's stock market may see a short-term pause after having pumped up valuations, according to Jefferies. However, the brokerage expects foreign flows to provide a cushion to domestic flows that may have taken a breather.

During the session, shares of Gala Precision Engineering Ltd. listed on the BSE on Monday at Rs 750 apiece, a premium of 41.8% over its issue price of Rs 529 per share.

The market is likely to turn volatile in the coming days as US presidential elections and Fed rate decisions will continue to weigh, according to VK Vijayakumar, chief investment strategist at Geojit Financial Services.

The market's weakness can be used to gradually accumulate high-quality largecaps and defensives, such as pharmaceuticals, he said.

Stocks in the Asia-Pacific region plunged on Monday as the risk-off mood intensified on concerns that the Federal Reserve may have waited too long to cut interest rates. The Japanese benchmark equity gauge led the declines on Monday, while the MSCI Asia Pacific index, excluding Japan, declined by 1.25% to 679.56 during the day.

"While penciling down 24,800 as the region that could step in and slow down a dive initially aiming for 24,400, we did not expect Friday to end without conquering the same," said Anand James, chief market strategist at Geojit Financial Services.

This raises the odds of a recovery swing, especially with oscillators in hourly periodicities deeply oversold, James said. "We will keep the downside marker at 24,750 (for Nifty), a break of which would reopen flood gates for 24,400-24,000." 

Shares of ICICI Bank Ltd., Infosys Ltd., ITC Ltd., HDFC Bank Ltd., and Hindustan Unilever Ltd. were contributing to the gain to the Nifty 50.

While those of Oil and Gas Corp. Ltd., Tata Motors Ltd., NTPC Ltd., State Bank of India, and Hindalco Industries Ltd. were weighing on the index.

On NSE, seven of the 12 sectors declined, with Nifty Oil and Gas and PSU Bank slipping the most during the session. The Nifty FMCG and Bank rose the most on Monday.

Broader markets underperformed the benchmark indices. The BSE Midcap and Smallcap were trading 0.59% and 0.76% lower, respectively, through midday on Monday.

On BSE, 15 of the 20 sectors declined, with BSE Oil and Gas and Energy leading the fall.

Market breadth was skewed in favour of the buyers. Around 1,467 stocks rose, 2,389 stocks declined, and 153 stocks remained unchanged on the BSE.