Indian equity markets ended a highly volatile session with significant gains:Sensex up 1,325 pts, Nifty tops 10,023

How the stock market rally after hitting a 10 per cent lower circuit limit? BSE benchmark Sensex staged such a coup today, recouping over 4,000 points from day’s low after a 45-minute trading halt.

While investors were bracing for another lower circuit of 15 per cent on the domestic indices, something happened in the 45-minute trading halt, which changed the sentiment altogether.

Following are the some possible factors for the dramtic recovery of the market today

Dow futures for March delivery, which had been trading nearly 700 points lower, erased entire losses and traded 500 points higher at 21,396 around 10 am this morning. The sharp rebound in US futures, especially after the index hit the 10 per cent circuit overnight, eased investor concerns some bit.

What, however, lifted the index sharply was the short coverings in Nifty Bank. “There are no major changes in call or put concentration though, as investors are fearful after what happened earlier in the day,” experts said.

SEBI and stock exchanges have a robust risk management framework in place, which automatically gets triggered in response to movement in the indices as well as stocks in the cash and derivatives market.

Investors also took comfort in the fact that oil prices headed for the biggest weekly loss since 1991 and US crude headed for its worst week since 2008.