Indian stock markets rebounded on Tuesday, buoyed by positive global cues and the Reserve Bank of India's Monday evening announcement of USD-INR forex swap facilities to attract foreign currency inflows. The BSE Sensex opened 0.70 per cent higher at 74,035.41, while the NSE Nifty 50 gained 0.59 per cent to trade at 23,259.05.
Drivers of Recovery
According to banking and market expert Ajay Bagga, the recovery was driven by a combination of global and domestic factors. He noted that the chip sell-off reversed in US markets on Monday, with markets ending in the green as buying interest returned to the sector, boosting AI momentum plays. US markets closed higher overnight, helping improve investor sentiment across Asia. At the time of filing, Dow Jones Futures were up 45.43 points, or 0.09 per cent, at 50,830.44. The S&P 500 rose 0.30 per cent, while the Nasdaq gained 0.86 per cent.
Technology Sector Boost
Bagga also pointed to developments in the technology sector. The SpaceX IPO is well oversubscribed, with collections ending by Wednesday and a listing on Friday. This removes a major overhang of liquidity creation by selling other AI holdings. Additionally, a US federal judge's decision to strike down the USD 100,000 H-1B visa fee introduced by the Trump administration could boost sentiment for Indian IT stocks.
Geopolitical Developments
Geopolitical developments also supported market sentiment. Iran and Israel announced an end to military conflict, endorsing a ceasefire call from Trump. This has held up overnight, helping stocks recover this morning in Asia.
Market Outlook
Despite the rebound, Bagga noted that Indian markets have lagged other emerging markets in recent sessions, with foreign portfolio investors (FPIs) withdrawing more than Rs 36,000 crore over the last six trading days. He, however, expects a recovery. Indian markets remain heavily oversold. We expect a rebound on technical grounds later in the week from these heavily pessimistic levels.
RBI Support
Bagga also highlighted support from the Reserve Bank of India. RBI has notified its FCNR(B) policy support. We expect at least USD 40-50 billion of inflows via the FCNR(B) route. Telecom stocks may also see buying interest after a High Court ruling struck down retrospective spectrum levies imposed on telecom operators in 2012.
Asian Markets and Commodities
Across Asia, markets traded higher. Japan's Nikkei 225 rose 1.73 per cent to 65,155.00, while South Korea's Kospi jumped 4.99 per cent. In commodities, Brent crude fell 1.15 per cent to USD 93.25 per barrel, while crude oil declined 1.44 per cent to USD 90.00. Gold, however, gained 0.48 per cent to trade at USD 4,337.58.
