The equity benchmark indices traded higher on Tuesday, supported by gains in auto and IT stocks and positive trends in Asian markets.
Sensex, which dropped 206 points or 0.25 percent to the day's low of 80,398.23 in early trade, recouped losses to trade higher at 80,674.66, up 276 points from day's low at around 12:50 p.m. The Nifty also advanced to trade above 24,600 level.
Maruti Suzuki India, Tech Mahindra, Hero MotoCorp, Mahindra & Mahindra and Tata Steel were among the major gainers, rising up to 3 percent intraday. The market breadth was also positive as about 2070 shares advanced, 1443 shares declined and 127 shares unchanged.
Key factors behind Tuesday’s rally:
1) Geopolitical developments: Market sentiments have improved ahead of the US President Donald Trump and Russian President Vladimir Putin meet in Alaska on Friday to discuss the Russia-Ukraine conflict.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said any breakthrough in the talks could significantly improve market sentiment and render irrelevant the additional 25 percent penal tariffs imposed on India for buying oil from Russia.
2) Positive Asian cues: South Korea's Kospi, Japan's Nikkei 225, Shanghai's SSE Composite and Hong Kong's Hang Seng were trading higher. Wall Street futures also indicated a positive opening for US markets.
3) Rupee edges up: The rupee rose 10 paise to 87.65 against the US dollar in early trade, tracking gains in domestic equities. Traders said the currency remained in a narrow range amid uncertainty over trade tariffs between India and the US.
4) IT stocks advance: The Nifty IT index was among the top sectoral gainers, aided by value buying and expectations of a US Federal Reserve rate cut in September. Attention is now on US July inflation numbers due Tuesday. Oracle Financial Services Software, Persistent Systems, Coforge and Tech Mahindra rose up to 3 percent intraday.
Technical view
Anand James, Chief Market Strategist at Geojit Financial Services, said a move above 24,590 could open the way for 25,000, with resistance seen at 24,670-24,850. A fall below 24,450 could weaken momentum, but a slide to the 200-day SMA at 24,049 is unlikely unless key support is breached.
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