Japan's Nikkei jumps 10% after Monday's plunge; Toyota, Honda Motor lead recovery

Japan's Nikkei 225 marked a recovery on Tuesday, August 6, a day after the frontline index plunged to a historic low in the backdrop of the Bank of Japan raising the benchmark lending rates.

The index soared by over 10% to reach a high of 34,911.8. At 11:30 am (local time), it decelerated to 34,416.32, but was still up 9.4% as against the previous session's close.

On Monday, Nikkei logged its worst day of performance since 1987 as it plunged by 12.4%. The index was down nearly 20% from the all-time high recorded on July 11.

The recovery of around 10% has erased much of the losses. The highest-ever gain in a single day was recorded by Nikkei in October 2008, when the index had soared by 14.8%.

The recovery was led by automobile majors Toyota Motor Corporation and Honda Motor Company, which rose by 16% and 12%, respectively.

Among other top gainers were chipmaker Tokyo Electron and bank holding company Mitsubishi UFJ Financial Group, which advanced 16% and 7.6%, respectively.

How Indian indices performed on Monday

Indian equity benchmark indices ended Monday's session at an over-one-month low, weighed down by index heavyweights. Bears dominated the trading session right from the outset amid a broad-based sell-off in global markets.

Due to the collapse of the yen carry trade, investors throughout the world were scrambling to unwind trades. On Monday, major international markets experienced significant drops. During the day's trading session, all three major indices of Japan, Taiwan, and South Korea had downward circuits.

At the end of the day, NIFTY50 and SENSEX declined 2.68% and 2.74%, respectively. Broader market indices witnessed a steeper correction as the Midcap 100 and Smallcap 100 index fell 3.55% and 4.57%, respectively.

With the steep fall of about 3% in the last two-trading sessions, the NIFTY50 index is now trading closer to its 50-DMA. The 50-DMA is placed at a level of 23,862, this could serve as an important support level for the index in the near term.