Equity benchmark indices Sensex and Nifty surged on Tuesday to hit near 1 month high, tracking positive global trends and strong buying interest in banking stocks among other factors.
Extending its previous day's rally, the Sensex jumped 1,131.31 points or 1.53 percent to settle at 75,301.26. During the day, it soared 1,215.81 points or 1.63 per cent to 75,385.76.
The NSE Nifty surged 325.55 points or 1.45 percent to 22,834.30.
ICICI Bank, Zomato, Mahindra & Mahindra, Tata Motors, Larsen & Toubro, Hindustan Unilever, Power Grid and Adani Ports were among the major gainers.
Key drivers of the rally
1) Global market cues: A firm trend in global equities lifted investor sentiment. On Wall Street, key indices extended gains for the second straight session on Monday, with the Dow Jones Industrial Average rising 353.44 points or 0.85 percent to 41,841.63. The S&P 500 gained 36.18 points or 0.64 percent to 5,675.12, while the Nasdaq Composite added 54.58 points or 0.31 percent to 17,808.66. Asian markets, including Seoul, Tokyo, Shanghai and Hong Kong, were trading in the green.
2) Value buying: Investors sought bargains after the recent market correction, leading to across-the-board buying. The Nifty Bank index traded above 49,000. "Broad indications suggest that the market has bottomed out, though further corrections cannot be ruled out," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
3) Favourable macroeconomic trends: India’s trade deficit fell to a three-and-a-half-year low, bolstering market sentiment. A rebound in GDP growth for Q3 FY25 to 6.2 per cent, a 5.1 percent rise in industrial output (IIP), a 16 percent increase in gross tax collections and a decline in retail inflation to 3.6 percent also supported the rally.
4) Stronger rupee: The rupee appreciated 10 paise to 86.71 against the US dollar in early trade, aided by positive equity trends and a firm Asian currency basket. On Monday, the rupee had gained 24 paise to close at 86.81.
5) China factor: China’s recent stimulus measures to boost consumption, along with stronger-than-expected retail sales and fixed asset investment growth, lifted market sentiment. Shares of domestic metal manufacturers gained on expectations of increased demand from China.
Technical outlook
Anand James, Chief Market Strategist, Geojit Financial Services, said the upside momentum continued as anticipated, despite resistance at 22,580. "The piercing candle formation supports further gains, with an initial target of 22,750, while downside support is now placed at 22,470," he said.
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