The Indian stock market experienced a notable turnaround on Tuesday, with both the Sensex and Nifty recovering from early losses. This rebound was fueled by optimism surrounding a potential trade agreement with the United States and the reopening of the U.S. government, which positively influenced market sentiment. Despite this uplifting atmosphere, gains were somewhat restrained by a decline in financial stocks, particularly after Bajaj Finance lowered its asset growth forecast. Additionally, market volatility heightened as the Nifty 50 prepared for its weekly derivatives expiry.
The S&P BSE Sensex concluded the day with an increase of 0.4%, closing at 83,871.32, marking a gain of 335.97 points. Meanwhile, the NSE Nifty 50 saw a rise of 0.47%, or 120.60 points, to finish at 25,694.95.
Analysts offered insights into the day’s market dynamics. The domestic market began on a weak footing, influenced by concerns regarding a recent explosion in Delhi. However, it quickly picked up momentum and wrapped up at the day’s peak, buoyed by positive global indicators, particularly after the U.S. Senate passed a bill ending the longest federal shutdown in history. Vinod Nair, Head of Research at Geojit Investments, noted that the nearing conclusion of the Q2 results season is promising, with expectations for a favorable outcome supported by stronger-than-anticipated performance across the broader market. He highlighted that sectors such as IT, automobiles, metals, and FMCG drove the rally.
As investors await upcoming domestic inflation data, expectations of continued moderation amid declining food prices raise hopes for further policy easing by the Reserve Bank of India (RBI). Looking ahead, Nair anticipated a robust rebound in earnings for the third quarter, contingent upon the successful finalization of a trade deal with the U.S.
In the U.S., markets faced slight declines, with the S&P 500 and Nasdaq dipping due to concerns over high technology valuations and the continuing effects of the government shutdown. A weekly update on ADP’s preliminary payroll figures presented a bleak picture, indicating that private employers shed an average of 11,250 jobs over the last month, dampening overall market sentiment.
European markets, however, displayed resilience, with the STOXX 600 rising by 0.6% despite declines in the S&P 500 and Nasdaq futures. The FTSE 100 enjoyed a gain of 0.8%.
On the technical front, Rupak De, Senior Technical Analyst at LKP Securities, observed that the Nifty experienced volatility before closing strongly, regaining its position above the 21-day exponential moving average (EMA) on the daily chart. The relative strength index (RSI) showed signs of entering a bullish crossover, with the 21EMA and 50EMA indicating a positive crossover. De projected a favorable short-term trend for a rally towards 26,000, with immediate support set at 25,600.
Bharti Airtel led the most active stocks in terms of turnover with a trading volume of Rs 3,029 crore, followed by Bajaj Finance (Rs 2,396 crore), and Infosys (Rs 2,087 crore).
In volume terms, Vodafone Idea emerged as the most actively traded stock, with 196.2 crore shares changing hands, followed by Reliance Power and YES Bank. Stocks showing strong buying interest included Poly Medicure, Hind Copper, and KEC International.
On an overall note, while 110 stocks reached their 52-week highs, 172 stocks fell to their lows. Notable among those hitting highs were NALCO and Mahindra & Mahindra, while significant selling pressure was observed in shares like Bajaj Finance and Transformers & Rectifiers.
Market sentiment revealed a bearish tone; out of the 4,363 stocks traded on the BSE, 2,245 experienced declines while 1,936 saw advances, and 182 remained unchanged.
