Indian stock indices recover after bloodbath; Sensex surges over 500 points

The Indian stock markets saw some ups and downs on Tuesday but managed to finish in the green, offering a break after the steep decline on Monday.

By the end of the trading session, the Sensex had gained 535.24 points, or 0.71%, closing at 75,901.41. Similarly, the Nifty was up by 128.1 points, or 0.56%, ending at 22,957.25.

Out of the 4,629 companies traded, 1,116 saw an increase, while 2,429 declined, and 84 remained unchanged. Despite weak global signals, the markets showed resilience, mostly rising throughout the session, though a sharp drop in the last half hour wiped out much of the gains.

On the sectoral side, rate-sensitive industries like realty, banking, and auto performed well, thanks to the RBI's announcement of measures aimed at boosting liquidity.

However, the pharma and energy sectors faced some selling pressure. Broader markets continued to underperform, with mid-cap stocks losing nearly 0.5% and small-cap stocks falling by around 2%.

Ajit Mishra, Senior Vice President of Research at Religare Broking, mentioned, "Markets have repeatedly struggled to sustain recovery attempts, and this session was no exception. Ongoing caution ahead of the Union Budget, a mixed earnings season, and weak global cues are further unsettling participants."

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, observed that the Indian market seemed oversold and was due for a rebound. "The RBI's move to infuse liquidity of Rs 1.5 trillion into the banking system is positive for the market. It increases the likelihood of a rate cut by the MPC in February. Banks are likely to benefit," he noted. He further added that the market was now trading at fair valuations, in line with long-term averages, following recent corrections.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, remarked, "Technically, after a strong start, the market saw a sharp bounce but then witnessed profit booking at higher levels. A long-legged Doji candlestick formation on daily charts suggests indecisiveness between the bulls and bears."

The optimism today was largely driven by the banking sector's performance after the RBI's intervention to ease liquidity concerns. Vinod Nair, Head of Research at Geojit Financial Services, stated, "Large-cap stocks outperformed as their valuations are now considered fair, and expectations are high that the market correction is nearing its end. However, mid- and small-cap stocks continued to slide due to overvaluation. Volatility is likely to remain high in the short term due to the upcoming Union Budget, the FOMC meeting, and the F&O expiry."