NEW DELHI: The bulls showed who is in-charge with a spectacular comeback today, lifting the stock benchmarks by over 1 per cent.
Buying picked up only during the final hours of the session.
Today's show was driven by RIL and financial stocks, which were the major contributors.
The strength reflected optimism in most Asian markets as US 10-year Treasury yields edged up after two days of decline.
A strengthening rupee amid firm FII buying helped cement sentiment further.
The Sensex closed at 38,233, up 425 points, or 1.12 per cent, where only seven constituents ended in the red. The broader Nifty went up 129 points, or 1.14 per cent, to 11,483.
Domestic indices in the previous session dropped because of recession fears in the world's biggest economy -- the US -- and global growth slowdown.
Market bulletin
Among Sensex stocks, SBI with gains of 3.23 per cent was the best performing stock. NTPC, Vedanta, RIL, ICICI Bank and Bajaj Finance too recorded strong gains.
Infosys, on the other hand, declined the most at 1.23 per cent. Bajaj Auto, ITC, L&T, Coal India and TCS too joined the losers' brigade.
Midcap and smallcap indices joined the party too. While the BSENSE 2.51 % Midcap climbed 1.09 per cent, the Smallcap index surged 0.66 per cent.
In the sectoral space, barring IT and technology, all indices ended in a pool of green, with bankex leading the charge. Energy, power and utilities saw value buying.
The factors: A fact-check
Firm global cues: Most Asian shares ended the day in green, with Nikkei 225 rallying 451.28 points, or 2.15 per cent, to 21,428.39. Taiwan Weighted advanced 79.72 points, or 0.76 per cent, to 10,559.20, Jakarta Composite 57.19 points, or 0.89 per cent, to 6,468.44 and Straits Times 15.47 points, or 0.49 per cent, to 3,198.39. The Shanghai index slipped over 1 per cent.
Asian shares looked good on Tuesday after two days of losses as US 10-year Treasury yields rose, but the outlook remained murky as investors weighed the odds of whether the US economy is in danger of slipping into recession, according to Reuters.
Liquidity position comfortable: Market sentiment also got some boost after the finance ministry and the Reserve Bank of India (RBI) on Monday said liquidity situation of the economy is comfortable and it will be further increase by Rs 35,000 crore through the rupee-dollar swap window.
Strengthening rupee: The rupee appreciation pushed investors more towards equities. The local currency strengthened by 15 paise to 68.81 against the dollar intraday on fresh selling of the greenback by exporters.
Possibility of rate cut by US? Global market tanked sharply on Monday after 10-year US bond yield fell below 3-month bond yields, reflecting an inverted yield curve, which is seen as harbinger for recession. Former US Federal Reserve chair Janet Yellen said the US Treasury yield curve may signal the need to cut interest rates at some point, but it does not signal a recession.
Heavy buying in RIL and financial stocks: The oil-to-telecom behemoth Reliance Industries alone lifted the Sensex over 125 points on Tuesday. Financial majors, including ICICI Bank, HDFC Bank, State Bank of India, Axis Bank, Bajaj Finance and IndusInd Bank, together added more than 250 points in the 30-share pack. However, Infosys and ITC offset some of the gains.
Expert Take
Devang Mehta, Head – Equity Advisory, Centrum Wealth Management
Indian markets have been recipient of robust foreign flows this entire march on the back of increased likelihood of strong political stability and policy continuity post elections and the softer stance adopted by global central banks... With the fourth quarter result season being just round the corner, the participants will watch the earnings trajectory closely for the rally to sustain or gather further steam.
Source: economictimes.indiatimes.com