The equity benchmark indices experienced a notable rebound on Tuesday, with the Sensex recovering over 400 points from its intraday low as investors regained optimism. After falling to an early low of 84,227.66, the Sensex climbed to 84,670.93 by around 1:30 PM, while the Nifty also made a comeback from 25,826.15 to trade at 25,944.65. This recovery was driven by a combination of positive economic indicators and investor sentiment, significantly impacting sectors like steel and insurance, with Tata Steel, JSW Steel, and SBI Life Insurance Company emerging as top gainers in the Nifty50.

Key factors contributing to this market recovery included expectations of a US Federal Reserve rate cut, which is anticipated to reduce short-term interest rates by 25 basis points. Lower rates in the US would enhance global liquidity, making emerging markets, such as India, more attractive for investments. Additionally, optimism surrounding US-China trade relations boosted market sentiment, with officials indicating a "preliminary consensus" ahead of a meeting between US President Donald Trump and Chinese President Xi Jinping. Prashanth Tapse from Mehta Ltd noted that the market remains supported by multiple catalysts, including a softer US CPI, inflows from foreign institutional investors (FIIs), and record-high indices on Wall Street.

Moreover, the volatility in the market was influenced by the Nifty monthly derivatives expiry, prompting traders to adjust their positions. The India VIX, which measures market volatility, eased by 2 percent, indicating reduced investor anxiety. Global markets provided a mixed backdrop, with Asian indices showing varied performances. On the technical side, analysts are closely watching the Nifty's ability to maintain its position above 25,900, as a breakout above 26,000 could signal an extended uptrend, while a drop below that level might weaken momentum. Overall, the market's response to these dynamics suggests cautious optimism moving forward.