Mumbai: The key Indian equity indices pared some losses and recovered from the day`s lows during the afternoon trade session on Tuesday after a massive downturn in the global stock markets unleashed a selling frenzy on the domestic bourses.
However, the indices continued to trade in the red.
The barometer 30-scrip Sensitive Index (Sensex) of the BSE recovered over 700 points from its day`s low at 33,482.81 points.
Around 2.12 p.m., the Sensex traded at 34,258.14 points -- down 608.35 points or 1.75 per cent from its previous close at 34,757.16 points.
Similarly, the wider Nifty50 of the National Stock Exchange bounced back over 200 points to trade at 10,527.15 points -- reclaiming the 10,500 mark -- down 139.40 points or 1.31 per cent from its previous close.
According to market observers, all the major Asian, as well as European stock markets, edged-lower following an overnight downward correction in Dow Jones by over 1,100 points.
Just after the pre-open session, the Sensex of the BSE traded more than 1,000 points or 2.90 per cent lower from Monday`s close.
"The rally last year was a global rally on liquidity easing. Hence any inkling of liquidity tightening, at a faster than expected pace, would lead to asset price contraction. That has played out over last two weeks," Anshul Saigal, Portfolio Manager and Head-PMS, Kotak Mutual Fund, told IANS.
"With earnings picking up, markets will focus on them in due time. Hence if we look beyond near term volatility, price corrections may turn out to be opportunities," Saigal added.
According to Anita Gandhi, Whole Time Director, Arihant Capital Markets, the recent correction in the equity markets will help to bring in valuations to the realistic level for new entrants and long-term players.
"Equity markets started on negative note with weak global cues and a sharp fall in the Dow Jones. Negative closing for two previous trading sessions had a cascading impact on the leveraged positions. The fall has been sharper than rise," said Gandhi.
"However, this correction will be helpful in bringing valuations to the realistic and attractive level for the new entrants, as well as for long term players.
"The recently announced Union Budget is growth-oriented and will help the economy in growth ignition, provided timely execution takes place," she added.
Deepak Jasani, Head, Retail Research, HDFC Securities, said: "The unprecedented downfall in Dow yesterday (Monday) and combination of other negative factors like the high fiscal deficit projected and proposal on long-term capital gains tax (LTCG) and fear of the stand that the Reserve Bank of India will take during Wednesday`s monetary policy review had led to this melt-down or selling panic."
Index heavyweights like Tata Steel, ICICI Bank, Axis Bank, Bharti Airtel and Larsen and Toubro were the top gainers on the BSE.
The top losers on the BSE were Tata Motors, Tata Motors (DVR), Tata Consultancy Services, Kotak Bank and Infosys.