The benchmark equity indices traded higher on Tuesday, tracking firm global cues and optimism over India-US trade talks.
Sensex climbed 594.95 points or 0.73 percent to settle at 82,380.69, while the broader Nifty advanced 169.90 points or 0.68 percent to finish the trade at 25,239.10, marking its highest intraday level in two months.
Axis Bank, Kotak Mahindra Bank, Mahindra & Mahindra, Larsen & Toubro and Oil & Natural Gas Corporation were among the major gainers, rising up to 2 percent.
Key factors behind market rise today
1) Optimism over India-US trade talks: Expectations of progress in the bilateral trade negotiations with the US supported investor sentiment. Brendan Lynch, Assistant US Trade Representative for South and Central Asia, is in New Delhi for discussions on a possible agreement to address tariff-related issues.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, "If we get a trade agreement that removes the punitive tariffs, it could be a real shot in the arm for Indian markets."
2) Fed rate cut hopes: Hopes of a rate cut by the US Federal Reserve also aided buying. Market participants are factoring in a 25-basis-point reduction at the conclusion of the two-day policy meeting on September 17, with a slim probability of a deeper cut, according to CME FedWatch data.
3) Strong global cues: Global equities traded mostly higher, with South Korea’s Kospi, Japan’s Nikkei 225 and Hong Kong’s Hang Seng gaining ground. US markets had ended in the green on Monday.
4) Rupee rises: On the currency front, the rupee appreciated 12 paise to 88.04 against the US dollar in early trade, tracking improved risk appetite ahead of the trade talks.
Technical View
Anand James, Chief Market Strategist at Geojit Investments, said: "A bit of consolidation unfolded yesterday on anticipated lines, with the downside pivots at 25,070/24,980 appearing sufficient for now. While we continue to watch these levels, a direct rise above 25,130 could also encourage us to get back on to the 25,400-25,600 ride. Alternatively, slippage past 24,930 could signal a pause to the near-term uptrend, but we see 24,700 as firm support."
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