Indian equity markets staged a modest recovery on Monday after a weak start, as investors selectively accumulated stocks perceived to be undervalued following last week’s sharp decline. The move underscores a market that remains cautious but unwilling to capitulate, with domestic flows stepping in even as external signals remain ambiguous.

The BSE Sensex had dropped nearly 350 points in early trade, while the NSE Nifty slipped close to 100 points, extending the previous session’s sell-off in which benchmarks lost over 1 percent. However, as trading progressed, both indices swung between gains and losses before turning positive by late morning. By around 11 am, the Sensex was trading about 104 points higher near 82,731, while the Nifty rose roughly 52 points to around 25,522.

The recovery was driven largely by value buying rather than fresh bullish triggers. Realty, pharmaceutical and FMCG stocks saw renewed interest after being beaten down in recent sessions. Investors appeared to use lower price levels to rebuild positions in defensives and rate-sensitive sectors, suggesting a tactical rather than structural shift in sentiment.

Public sector enterprises also contributed to the rebound. Shares of Power Grid Corporation of India and Coal India were among the top gainers within the Nifty50 universe, reflecting continued investor preference for stable cash-flow businesses amid volatility. Gains in such stocks often signal a defensive tilt, as institutional investors seek earnings visibility when macro uncertainty rises.

On the other hand, IT majors such as Infosys and Tech Mahindra declined, dragging on index performance. The weakness in technology stocks is consistent with broader global trends, where concerns about growth in key export markets and currency fluctuations continue to weigh on the sector. The divergence between defensives and cyclicals suggests that investors are repositioning rather than broadly increasing risk exposure.

External cues remained mixed. Asian markets did not provide a clear directional signal, with Hong Kong’s Hang Seng posting mild gains while Japan’s Nikkei remained largely flat. Several regional markets were closed for holidays, limiting liquidity and trend formation. US equities had ended the previous session on a mixed note, reinforcing uncertainty rather than offering a decisive lead.

Currency movement added another layer of caution. The Indian rupee weakened marginally against the US dollar, slipping to around 90.67 in early trade amid foreign fund outflows and a firm greenback. Higher crude oil prices and declining foreign exchange reserves also weighed on the currency. A softer rupee can support export-oriented sectors but raises inflation and external vulnerability concerns, particularly if the trend persists.

From a technical perspective, market strategists indicated that the Nifty remains in a consolidation phase. According to commentary from Geojit Investments, the index could drift toward the 25,270 - 25,215 zone if momentum weakens, while support near 25,450 may enable a rebound. A sustained move above roughly 25,530 would be needed to confirm a reversal of the recent downtrend.

For investors, the key takeaway is that the rebound appears fragile. There is no evidence yet of broad institutional accumulation or a macro catalyst strong enough to trigger a sustained rally. Instead, the market is being supported by selective bargain hunting after sharp declines.

The recovery indicates resilience in domestic liquidity, particularly from retail and local institutional investors. However, persistent foreign outflows and currency weakness remain headwinds. If global uncertainty intensifies, Indian markets could face renewed selling pressure despite strong domestic fundamentals.

Defensive and yield-oriented sectors such as FMCG, utilities and select PSUs are attracting capital, while IT stocks are under pressure. Realty and pharma may see short-term rebounds driven by valuation comfort rather than structural tailwinds.