Indian equity benchmarks staged a sharp intraday recovery on Tuesday, snapping a four-session losing streak that had stripped nearly 570 points off the Nifty 50, as a  rally in technology stocks calmed the geopolitical anxiety that had dragged the market to a gap-down open. The Sensex closed at 74,649.84, up 382.50 points or 0.52%, while the Nifty 50 ended at 23,483.55, up 100.95 points or 0.43%.

Tuesday opened in the red and stayed there — briefly. The Nifty gapped down to 23,229.15 at the open, a decline of over 300 points from Monday's close of 23,547.75, as overnight news of Iran halting nuclear negotiations with the United States, fresh US-Iran military exchanges and continued Iranian missile attacks on Kuwait triggered broad risk-off selling at the bell. Banking stocks, power names and rate-sensitives bore the brunt early. Axis Bank slipped nearly 2%, NTPC fell close to 3%, and the Nifty Bank index remained under pressure for most of the morning session.

But the selling pressure had no staying power. From its intraday dip, the Sensex staged a recovery of more than 1,000 points by the early afternoon, entirely on the back of a furious rally in information technology stocks. By 3:00 PM, the Nifty was at 23,434, and the benchmark crossed 23,500 in the final stretch of trade.

AI is back, and it's lifting everything

The Nifty IT index surged 4.2% to close at 31,116.6, its third consecutive session of gains and the first time it has decisively crossed its 50-day moving average since January 2026.

TCS was the standout, jumping 6.5% to ₹2,446.9, the top gainer on Nifty 50 for the session. Infosys rose 5.7% to ₹1,270.8, and HCL Technologies gained close to 4%. All ten constituents of the Nifty IT index closed in the green.

The driver behind this move was not company-specific news but a broader re-rating of global technology stocks on the back of renewed AI-driven optimism.

"The primary driver behind the recovery was the explosive rally in the IT sector. The Nifty IT index surged over 4 per cent, with heavyweights such as TCS and Infosys leading the gains. The move was fuelled by strong earnings and guidance from major US technology companies, reinforcing the view that global AI, cloud, and enterprise technology spending remains resilient despite broader economic uncertainty," Hariprasad K, research analyst and founder, Livelong Wealth, said.

Trade deal tailwind

Alongside IT, the session drew an additional catalyst: expectations around the details of the first tranche of the US-India Bilateral Trade Agreement. The initial framework, struck in February 2026, had cut US tariffs on Indian goods from 50% to 18%, with India committing to stop purchasing Russian oil and increase purchases of American energy, technology and defence equipment. Late Monday evening, Commerce Minister Piyush Goyal confirmed that "all major points" between both US and India have been settled. Officials from both nations are expected to continue talks between June 2 to June 4 before the deal becomes official. Markets on Tuesday were pricing in positive developments on the finer details of that agreement.

Market cap gains ₹2.3 lakh crore in a day

The session's net gain was visible in the BSE total market capitalisation data. Data shared by the exchange showed all-India market cap rising from ₹4,59,72,323 crore on June 1 to ₹4,62,02,704 crore on June 2 — a single-day addition of approximately ₹2.30 lakh crore to investor wealth.

Broader market catches up

The Nifty Midcap 100 ended 0.25% higher and the Nifty SmallCap index gained 0.41% — modest but meaningful, given that both had been under selling pressure in recent sessions. The advance-decline ratio improved sharply from Monday's 1:2 to a broadly positive reading Tuesday, signalling that the recovery was not confined to just large-cap IT names.

On the institutional flow side, foreign institutional investors (FIIs/FPIs) net sold ₹8,362.92 crore on Tuesday, while domestic institutional investors (DIIs) net bought ₹9,589.32 crore, according to NSE data.