In a dramatic reversal, benchmark indices Nifty and Sensex surrendered most of their intraday gains, exposing persistent market fragility. The day began on a high note, as strong cues from Asian markets helped snap a seven-day losing streak for frontline indices. However, late-session selling pressure erased the momentum, with the Sensex tumbling nearly 900 points from its peak and the Nifty shedding 262 points.

The market's optimism over easing foreign selling earlier during the day quickly turned to apprehension after reports emerged of Ukraine's armed forces launching their first ATACMS missile strike on Russian border territory. The geopolitical flare-up added a fresh layer of tension to an already cautious market atmosphere.

At close, the Sensex was up 239.37 points or 0.31 percent at 77,578.38, and the Nifty was up 64.70 points or 0.28 percent at 23,518.50. About 2197 shares advanced, 1,591 shares declined, and 95 shares unchanged.

"This is just a bounce back after a steady downtrend for the past two months," said Ajit Mishra, Senior Vice President at Religare Broking in a conversation with Moneycontrol. "This isn't a recovery and investors are advised to wait and look out for decisive moves before entering the market," Mishra added.

The headline indices have corrected over 11 percent from their respective peaks, largely led by foreign outflows, stretched valuations, and a disappointing second quarter. While the pace of foreign institutional investor (FII) selloff has reduced, Mishra believes that "maintaining" this pace and a gradual reduction is more important for the markets. "We will see a selective approach from FIIs," Mishra said.

Among sectoral indices, Nifty Realty and Auto were the top performers and posted gains of 1.5 percent each. Market experts believe that better-than-expected festive sales and a steep correction in the past month caused renewed interest in the auto sector today. Real estate majors like DLF, Lodha, and Godrej Properties lifted the index higher.

The IT index also erased most of its gains and closed just 0.8 percent higher, partially recovering from yesterday’s losses, when it had dropped by more than 2 percent. Top contributors were TCS, HCL Tech, and Infosys. Other decent performers included Nifty Bank, Healthcare and Pharma, all ending the positive.

The broader market, comprising mid-small cap indices, outperformed the headline indices with gains of almost a percent each. Despite the sharp bounce back, Vijayakumar of Geojit Financial Services suggests investors to not rush into grabbing these stocks as they have more downside potential. In contrast, quality largecaps are resilient and investors can stick to them, he added.

Four-wheeler major M&M closed over 3 percent to top the Nifty index after CLSA reiterated its 'outperform' rating, maintaining a target price of Rs 3,440. This indicates a potential upside of 16 percent from current levels. Insights from CLSA's engagement with M&M’s management revealed strong confidence in the automaker’s growth trajectory.

PSP Projects also jumped 10 percent on news that the Adani Group is in advanced discussions to acquire a majority stake in the Gujarat-based construction company. CNBC-TV18, citing unnamed sources, reported that the Adani Group is looking to purchase a 60.14 percent stake in PSP Projects from its promoters.

However, there is still hope for a recovery, as indicators suggest the market may have reached its lowest point," Anand James of Geojit Financial Services said. "For now, any gains are expected to stay within the range of 23,733 to 23,788, with further signals needed to aim for 24,111. On the other hand, if the index fails to stay above 23,565, the recovery could be delayed, though a major drop seems unlikely today," he added.

M&M, Tech Mahindra, HDFC Bank, Trent and Eicher Motors were the top gainers on the Nifty. Laggards included SBI Life Insurance, Hindalco, Reliance, HDFC Life, and SBI.

The market will remain shut on Wednesday, November 20, on account of Maharashtra Assembly polls.