Stock Market Rebounds Strongly
The Indian stock market opened in the green on Tuesday, witnessing a sharp rebound from losses recorded in the previous session. The benchmark indices surged nearly 1% in early trade, with the S&P BSE Sensex rising by 731.43 points to reach 77,918.17, while the NSE Nifty50 climbed 203.30 points, trading at 23,564.35.
The rally comes after the Indian rupee hit an all-time low of 87.28 against the US dollar on Monday due to concerns over global trade policies. However, with encouraging global market cues and renewed investor confidence, the stock market gained momentum, reversing the downward trend seen earlier.
Analysts believe that multiple factors contributed to the strong market performance, including improving global sentiment, rupee appreciation, and expectations of an interest rate cut by the Reserve Bank of India (RBI).
Global Market Recovery Boosts Investor Sentiment
One of the major drivers of Tuesday’s rally was a recovery in global equities. After a significant decline on Monday, stock markets worldwide showed signs of improvement. The US administration’s decision to temporarily halt tariff increases on Mexico and Canada provided a boost to investor confidence. Market experts suggest that similar strategies could be applied in negotiations with China, reducing concerns over prolonged trade disputes.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out that the decline in the dollar index to 108 played a key role in supporting market sentiment. “This is a positive development for domestic institutional investors (DIIs), who are expected to increase their allocations in sectors such as automobiles, white goods, jewelry, hotels, and food delivery businesses,” he said.
Rupee Strengthens, Supporting Market Momentum
Another crucial factor contributing to the stock market’s recovery was the improvement in the Indian rupee. The currency, which had closed at an all-time low of 87.28 against the US dollar on Monday, recovered by 13 paise, trading at 86.98. The rupee’s recovery eased foreign investor concerns, providing further stability to the financial markets.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, noted that the positive global cues, along with the US government’s stance on trade tariffs, helped revive buying interest among Indian investors. Additionally, the services sector in India showed significant growth, with the PMI index reaching a six-month high of 57, indicating stronger economic activity.
Rate Cut Expectations Drive Optimism
Investor expectations of a 25-basis-point rate cut in the upcoming RBI monetary policy also played a significant role in boosting market sentiment. Lower interest rates could potentially reduce borrowing costs and support overall economic growth.
“The market has already factored in the likelihood of an interest rate cut,” Bathini said. “If the RBI moves ahead with this decision, it could further enhance economic recovery and improve corporate earnings.”
Sectors Leading the Market Rally
Most sectoral indices were trading positively, with banking, financials, IT, and auto stocks leading the gains. However, the FMCG sector witnessed minor profit bookings following a strong performance in the previous week.
Non-banking financial companies (NBFCs) such as Bajaj Finance, M&M Finance, and Shriram Finance displayed robust momentum, signaling sustained investor interest in the sector. Aditya Gaggar, Director at Progressive Shares, expressed optimism about the auto sector, advocating a stock-specific approach. “NBFCs are performing well, and we anticipate this trend to persist in the short term,” he added.
