Markets extended their recovery for a second straight session on Tuesday as the Nifty 50 closed at 22,776.10. Siddhartha Khemka said, “the correction has brought valuations to more reasonable levels.” While stocks got a boost, the rupee fell 13 paise to close at 96.42 against the US dollar on Tuesday.
Markets extended their recovery for a second straight session on Tuesday, clawing back ground after an eight-week slide that had dragged the Nifty 50 down 8.8 per cent, its longest losing streak since 2020. The rebound came even as the rupee slipped to near all-time lows and the country braces for the Reserve Bank of India’s first interest rate decision since February 2023, due Wednesday.
“...the rebound follows an eight-week decline in which the Nifty fell 8.8 per cent... the correction has brought valuations to more reasonable levels, while Q2 business updates triggered stock-specific buying,” said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.
The Nifty 50 closed at 22,776.10, up 220.35 points or 0.98 per cent, after opening around 47 points higher and touching an intraday low of 22,561.60, before sustained buying pushed the index to close at its session high. The BSE Sensex gained 685.34 points, or 0.95 per cent, to end at 73,067.81. Bank Nifty rose 414.30 points, or 0.76 per cent, to close at 55,128.40, with Kotak Mahindra Bank among the standout performers, gaining around 3.82 per cent.
The broader markets outperformed the benchmarks, with the Nifty Midcap 100 rising 1.08 per cent and the Smallcap 100 advancing 1.56 per cent. Market breadth turned decisively positive after five consecutive negative sessions, with the advances-declines ratio at 1.82, its highest since July 10. India VIX fell sharply to 13.61, signalling easing near-term volatility.
The sectoral performance was largely positive. Chemicals led gains, rising over 2 per cent, followed by Pharma up 1.7 per cent, Oil & Gas 1.6 per cent and FMCG 1.4 per cent. Nifty Bank rose 0.8 per cent, underpinned by healthy Q2 business updates and rate-hike positioning. IT shed nearly 2 per cent, while PSU Banks and Realty also closed in the red. Trent, BSE and Kotak Mahindra Bank were the top Nifty gainers; Coal India, Tech Mahindra and Max Healthcare ended as the key laggards.
On the currency front, the rupee depreciated 13 paise to close at 96.42 against the US dollar, weighed down by sustained dollar demand from foreign portfolio investors and oil companies. Jateen Trivedi, VP Research Analyst at LKP Securities, said the rupee range for Wednesday is expected between “...96.00–96.75,” with the RBI policy outcome and its guidance likely to keep the currency volatile.
Spot gold traded near $4,153, up about 0.4 per cent, with silver holding above $61, supported by a pullback in the dollar and US Treasury yields from recent peaks. Brent crude slipped below $99 a barrel and WTI traded near $88, as rising Gulf supply and planned G7 reserve releases pointed to a loosening oil market.
All eyes now turn to the RBI’s Monetary Policy Committee decision on Wednesday. The consensus expects a 25 basis point repo rate hike from 5.25 per cent to 5.50 per cent, which would mark the first increase since February 2023. The GST Council is also scheduled to meet Wednesday.
“...volatility is likely to stay high... the RBI Monetary Policy Committee meeting scheduled for tomorrow, along with its commentary, given the challenging macro backdrop,” said Ajit Mishra, SVP Research at Religare Broking. Analysts broadly agree that a policy outcome in line with market expectations could push the Nifty toward the 23,000 mark, while any hawkish surprise or renewed pressure from crude and US yields could trigger fresh selling near resistance.