Indian equity benchmarks staged a recovery on Tuesday, with both the BSE Sensex and NSE Nifty snapping their recent losing streak to close in positive territory. The rally was fueled by gains in heavyweight stocks and encouraging signals from global markets, which boosted investor sentiment after a period of uncertainty.
Market Performance and Key Figures
The 30-share BSE Sensex climbed 397.74 points, or 0.49 per cent, to settle at 82,307.37. Meanwhile, the broader NSE Nifty index rose 132.40 points, or 0.53 per cent, closing at 25,289.90. This upward movement marked a significant shift from the previous sessions where both indices had faced downward pressure.
Global Triggers and Market Sentiment
Market analysts attributed the improved sentiment to several international developments. Notably, US President Donald Trump's decision to withdraw tariff threats against the European Union created a positive ripple effect across global markets. Additionally, his optimistic remarks regarding a potential India-US trade deal encouraged risk-taking behavior among domestic investors.
Gaurav Garg, Research Analyst at Lemonn Markets Desk, commented, "Sentiment improved following US President Donald Trump's withdrawal of tariff threats against the EU and his optimistic remarks on a potential India-US trade deal, which encouraged short-covering and risk-taking."
Corporate Earnings and Valuation Concerns
Despite the day's gains, analysts cautioned that the upside remained limited. The initial set of corporate earnings announcements failed to provide strong justification for the prevailing market valuations, creating a cap on further advances.
Vinod Nair, Head of Research at Geojit Investments Ltd, noted, "The initial set of corporate earnings did little to support current valuation levels." However, he added that investors have not completely ruled out potential upside from robust domestic demand, which might become more evident in upcoming quarterly results.
Asian and European Market Support
Asian markets provided substantial support to domestic equities, with key indices across the region closing higher:
- Japan's Nikkei 225
- Shanghai's SSE Composite
- South Korea's Kospi
- Hong Kong's Hang Seng
European markets were also trading positively during mid-session deals, while US equities had ended higher on Wednesday, further bolstering global risk sentiment.
Institutional Activity and Foreign Investment
On the institutional front, foreign portfolio investors continued to reduce their exposure to Indian equities. According to exchange data, foreign institutional investors offloaded equities worth Rs 1,787.66 crore on Wednesday. In contrast, domestic institutional investors demonstrated confidence by purchasing shares worth Rs 4,520.47 crore, providing a counterbalance to foreign selling pressure.
Commodity Markets and Inflation Outlook
Meanwhile, crude oil prices softened, offering some relief on the inflation front. Brent crude declined by 1.10 per cent to USD 64.52 per barrel. This downward movement in oil prices is seen as positive for the Indian economy, as it helps alleviate inflationary pressures and supports broader economic stability.
Looking Ahead: Key Triggers and Cautions
Market participants are expected to remain cautious in the coming sessions, with attention focused on several key global macroeconomic triggers. Vinod Nair highlighted, "Looking ahead, markets will closely monitor US GDP growth and core inflation data later today, as well as the BoJ policy decision due tomorrow, for further cues."
The interplay between domestic corporate performance, global trade developments, and institutional investment patterns will likely determine the market's direction in the near term. While Tuesday's recovery provided welcome relief, sustained momentum will depend on concrete positive developments across these fronts.
