The stock market experienced a notable rebound on Tuesday, recovering from a significant global downturn that erased more than $10 trillion in wealth just a day prior. This encouraging recovery was fueled by positive developments in major Asian markets, allowing India’s benchmarks — Sensex and Nifty — to break a three-day losing streak that saw losses of up to 5%.
Market Performance Overview
The Sensex surged by 1,089.18 points, marking a 1.49% increase, closing at 74,227.08. Meanwhile, the Nifty climbed 374.25 points, or 1.69%, reaching 22,535.85, its best percentage gain in three months. This rally reflects a strong investor sentiment bolstered by optimistic expectations surrounding ongoing trade negotiations.
- Sensex: +1,089.18 points (1.49%)
- Nifty: +374.25 points (1.69%)
Boost from Trade Talks
Investor enthusiasm was further enhanced by hopes for favorable outcomes from bilateral trade discussions, particularly after several nations affected by recent U.S. tariff announcements sought dialogue with Washington. Among Asian markets, Japan led the charge with a 6% increase, buoyed by reports of priority in U.S. trade talks. Other countries like China, the Philippines, and Hong Kong also reported gains, with increases of up to 3.15%. Additionally, many European markets mirrored this positivity, gaining nearly 3%.
Anticipation of RBI Policy Changes
Investor optimism was also linked to expectations of a potential repo rate cut and a shift towards a more accommodative monetary policy stance from the Reserve Bank of India (RBI) during its upcoming meeting. This anticipation has played a significant role in stabilizing market sentiment.
“Favorable global indicators facilitated a strong recovery in local benchmarks, as fears surrounding U.S. trade tariffs began to ease, allowing nations to seek solutions,” noted Prashanth Tapse, Senior Vice-President of Research at Mehta Equities. He emphasized that India’s consumption-driven economy may mitigate the impact of U.S. tariffs compared to others.
Investment Trends
On Tuesday, foreign portfolio investors (FPIs) sold Indian equities worth Rs 4,994.24 crore, while domestic institutional investors stepped in as net buyers, acquiring shares valued at Rs 3,097.24 crore, according to BSE’s provisional data.
The market breadth was strikingly positive, with 3,093 gainers compared to just 871 losers on the BSE. The broader indices outperformed the benchmarks, with the BSE Midcap and BSE Smallcap indices rising 1.87% and 2.18%, respectively, after sharp declines of 6.4% and 7.4% in the preceding sessions.
Volatility Eases
Market volatility decreased as the India VIX index fell by 10.31% to 20.44 on Tuesday, following a dramatic 65% increase on Monday.
Leading sectors included PSU banks, oil & gas, realty, consumer durables, and telecom, which saw gains of up to 2.64%. Notably, all stocks in the Sensex and Nifty, except for Power Grid (down 0.14%), closed in the green.
Top Performers
Among the top gainers in the Nifty were Jio Financial, Shriram Finance, BEL, Adani Enterprises, and Cipla, with increases of up to 5.61%. Overall, investors’ wealth surged by Rs 0.32 lakh crore, reclaiming almost half of the previous day’s loss of Rs 14 lakh crore.
Caution Advised
Despite the impressive rebound, some market analysts urged caution among investors, warning against overreacting to a single-day recovery. “Caution is advised as tariff-related news may continue to drive volatility. Moreover, the results of the MPC’s monetary policy meeting could further influence market fluctuations, especially with the weekly expiry approaching,” stated Ajit Mishra, Senior Vice-President of Research at Religare Broking.
In summary, while the market’s recovery is promising, staying vigilant and informed remains crucial for navigating the current landscape.
